USDCAD is bid. Yesterday’s comments by ECB official Ewald Nowonty complaining that the US wants a weak dollar gave the greenback a lift which boosted USDCAD. The recent decline in WTI oil prices isn’t helping matters. WTI traded at $66.30 at the begiining of the month and is now trading at $61.29. The drop is due to a combination of profit-taking and concerns that rising US oil production (10.25 m/b per day) will more than offset Opec production cuts and expectations for higher global demand.
Today’s Canadian housing data (Starts and New Price Index) will not be a factor due to on-going stock market jitters. Bank of Canada Deputy Governor Carolyn Wilkins gives a speech in Quebec later today and is sure to be questioned about the January 17 rate hike in the Q and A session.
In Asia, the Reserve Bank of New Zealand left interest rates unchanged and dowgraded forecasts and traders concluded that the statement was dovish. NZDUSD dropped from 0.7260 to 0.7175. Prices recovered to 0.7205 by the time New York opened. AUDUSD traded with a negative bias and started today at the low.
USDJPY found a bottom early in Asia and then climbed steadily to open in New York unchanged from yesterdays close. Prices were underpinned by firmer Treasury yields.
EURUSD traded lower overnight and is now flirting with support in the 1.2230 area. Nowotny’s remarks may have encouraged the unwinding of some of the large, stale, long EURUSD positions. The jump in US Treasury yields has also given rise to fresh speculation that the Fed will rasise rates at a faster pace then previously forecast.
Sterling see-sawed within a 1.3847-1.3916 range ahead of this monrning’s Bank of England policy decision, Quarterly Inflation Report and Governor Carney speech. The Bank of England left rates unchanged but hinted at higher rates, sooner that previosuly thought.
There is not any US economic data of note which suggests equity market concerns will drive trading.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish while prices are trading above 1.2530, looking for a test of resistance in the 1.2630-50 area which was support between November and December. If broken, it would target 1.2750. A move below 1.2530 would lead to additional 1.2440-1.2600 consolidation. For today, USDCAD support is at 1.2530 and 1.2510. Resistance is at 1.2595 and 1.2630.
Today’s Range 1.2530-1.2630
