USDCAD Overnight Range 1.3822-1.3919
The doves are out and they look just like Janet Yellen. The Chair of the Federal Reserve appears to be back-pedalling from the December dot-plot forecast of four rate hikes in 2016. The Wall Street Journal wrote that Janet Yellen “flagged risks to the economic outlook that could delay the bank’s plans for raising short-term rates” in her prepared remarks to Congress, this morning. She appears to have a heightened concern on financial conditions, foreign uncertainty and inflation expectations.
That is not good news for the commodity bloc currencies as it underscores the weak global economic theme. If US growth is slowing, who is going to pick up the slack in commodity demand? It was good news for equity markets. European indices have hung on to their gains and New York futures point to a higher opening for US stocks.
Overnight, it was another choppy FX session in Asia. USDJPY sank, stalled and rallied and the antipodeans tracked that move. A Japanese politician said that they were monitoring the market and that they will “cooperating with other G-7 countries”. Yesterday, ECB board member Coeure said that “weakness in emerging market currencies is an “issue for global coordination and will be discussed in Shanghai”. Hmmm coordinated intervention.
WTI oil prices remain well below $30.00/b and is currently trading at $28.09. It is a tad surprising considering that Iran and Russia appear ready and willing to discuss production cuts with Saudi Arabia. The fact that there is no report of a Saudi response, may explain oil’s inertia.
USDCAD has rallied hard following the Yellen news. That is probably because fears of a slowing US economy aren’t good for Canadian growth prospects, either. However, downward pressure on oil prices is slowing the gains.
USDCAD technical outlook
The intraday USDCAD technicals are bearish since breaking below the 1.4420 level on January 21 and the downtrend remains intact below 1.3930. However, that level may be tested again today. The intraday technicals are modestly bullish while trading above 1.3820 supported by the break above 1.3860. For today, USDCAD support is at 1.3860, 1.3820 and 1.3780. Resistance is at 1.3930, 1.3970 and 1.4000
Forecast Range for the day 1.3860-1.3960
Chart USDCAD 4 hour