Overnight Range 1.2894-1.2921                     

Finally, the day has arrived.  Janet Yellen’s speech at Jackson Hole is scheduled for 10:00 am EDT. (8:00 am MT) Global markets have gotten themselves into a lather anticipating this speech and believe that they will finally get some guidance and clarity on US interest rate direction.  They may be disappointed.

There are only 26 days until the next FOMC meeting and another nonfarm payrolls report due, as well.  The July 27 FOMC statement said “In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal.”  The US CPI report which was released following that statement, was unchanged.

The statement also said “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data”.

With that in mind, the uber-cautious Janet Yellen may not provide any more clarity than what was in the July FOMC statement. That will be a serious disappointment to FX markets.

If Janet Yellen is doveish-USDCAD heads to 1.2750.  If she says nothing new, USDCAD will trade within a 1.2850-1.3000 range.  If she is as hawkish sounding as some of her colleagues were over the past few weeks, USDCAD will rally to 1.3100.

Overnight, the US dollar drifted modestly lower within narrow ranges.  Sterling traders didn’t get very excited about UK GDP data which came in as expected (Q2 GDP prelim. Actual 0.6% vs. forecast 0.6%)

The US dollar was modestly softer in overnight trading and has declined further since New York started trading. This morning, US 2Q GDP growth was revised down to 1.2% as expected

USDCAD technical outlook.

The intraday USDCAD technicals are bearish while trading below 1.2910 looking for a test of 1.2850.  A break above 1.2910 targets 1.2950.  Longer term, the well defined1.2650-1.3250 trading range that has contained USDCAD price action since May, is further supported by the uptrend line from January 2015, which comes into play at 1.2670.

For today, USDCAD support is at 1.2890, 1.2850 and 1.2810 Resistance is at 1.2920, 1.2960 and 1.2990.

Today’s Range 1.2820-1.2920

Chart: USDCAD 4 hour