USDCAD Open (6:00 am) 1.3329-32 Overnight Range 1.3321-1.3343
Calling Jerome Powell. Spring has sprung, what are your thoughts on the dots? His answer will be known this afternoon after the highly anticipated FOMC policy statement, updated forecasts and his press conference.
The US dollar opened with tiny gains after an uneventful, cautious overnight session. GBPUSD was the biggest mover, losing 0.29% and that had everything to do with UK issues and nothing to do with the Fed.
Traders are expecting a dovish outcome from this afternoon’s FOMC meeting suggesting that the risk is if the Fed is not as dovish as expected. The dot-plot forecasts are anticipated to be lowered, but even so, that still leaves one rate hike on the table for 2019. The rest of the G-10 central banks are on hold, and some are even hinting at rate cuts, which is a dollar positive.
USDJPY peaked at 111.68 in Asia and then dropped to 111.34, undermined in part, by the government downgrading their economic assessment for March, saying exports and output are showing weakness. Bank of Japan Governor Kuroda said further easing is a consideration if momentum to price target is lost.
AUDUSD dipped after dovish comments by RBA Assistant Governor Bullock that a glut of new apartments posed a risk to builders. Prices recovered in Asia, and AUDUSD opened unchanged in New York.
GBPUSD was sold early and often. Traders were a tad concerned that Prime Minister Theresa May’s request to the EU, for an extension of Article 50, would not be a “slam dunk.” Ms May is reportedly sending a letter today but may not get an answer until next week. UK CPI rose 1.9%, y/y, in February beating the 1.8% forecast but a dip in core CPI offset that news to 1.8%. However, the data took a back seat to Brexit fears.
EURUSD inched lower overnight but is back at yesterday’s closing level of 1.1352, content to trade sideways until this afternoon’s events are done.
WTI oil prices retreated from yesterday’s peak of $59.54/barrel and dropped to $58.84 in Europe before accelerating down to $58.42/b in early New York trading. Profit-taking ahead of the FOMC and concerns about the state of the China/US trade talks may have undermined prices.
A Bloomberg story suggesting that China is backing away from earlier pledges about data protection of pharmaceuticals was used as an excuse for some risk aversion trades.
USDCAD crashed below the 100 day moving average at 1.3301 yesterday but must not have liked the view. Prices touched support at 1.3252 and bounced like a fat man on a trampoline, rebounding to 1.3325, where it closed. The bounce was fueled by the combination of falling oil prices and profit-taking ahead of today’s FOMC meeting.
The Canada Federal budget released yesterday was not a factor for traders. There isn’t any US or Canadian data today so FX markets will be quiet until this afternoon.
The intraday USDCAD technicals are bearish. Prices are consolidating losses following the break below support in the 1.3380 last week and looking for another test of the long-term uptrend line which comes into play in the 1.3170-80 zone. However, there is a lot of support to chop through before a test will occur including the 100 day moving average (again) and the 1.3230-50 support area which were previous resistance zones. For today, USDCAD support is at 1.3320, 1.3280 and 1.3250. Resistance is at 1.3350 and 1.3390 . Today’s Range 1.3280-1.3380