The highly anticipated European Central Bank meeting was anti-climatic, so far. The ECB announced a €30 billion per month reduction in monthly bond purchases and extended the program for nine months. Those details had been widely “leaked” but EURUSD dropped, nevertheless, although it remains inside the 1.1660-1.1870 band that has contained prices since September 25.
Modestly better Initial Jobless Claims (Actual 233,000 vs forecast 235,000) and Wholesale Inventories data (0.3% vs forecast 0.4%) gave the greenback a little support.
Politic.com reported this morning that Janet Yellen is not even in the running for Fed Chair, quoting a top source who talks regularly to President Trump. The preferred candidates are Jerome Powell and John Taylor.
USDCAD traders are still reeling from yesterday’s post-BoC statement plunge and rally. When the dust had settled, USDCAD climbed 1.4%, rising from a low of 1.2632 to a peak of 1.2816.
The Bank of Canada statement and Monetary Policy report were not a lot different from expectations. The issue was the apparent delay of future rate hikes due to NAFTA negotiation concerns and the unknown impact of Federal fiscal stimulus.plans.announced in the Fall update.
Adding salt to the wounds were large speculative long CAD, short US dollar positions getting stopped out on the break of key resistance at 1.2790.
USDCAD sentiment is bullish, but but prices are likely to consolidate in a 1.2740-1.2840 range for the time being.
In Scandinavia, the Riksbank and the Norges Bank left rates unchanged, as expected.
Sterling got hammered thanks to a big miss in the CBI Trades Survey (Actual -36% vs forecast 15%). Analysts suggest today’s data is a correction of last months report which was skewed to the top. GBPUSD dropped from 1.3275 to 1.3180. Traders still see GBPUSD as a buy on dips with a break above 1.3290 targeting 1.3500.
USDJPY meandered in a 113.35-113.79 range, tracking US Treasury yields.
The antipodean currencies were not inspiring and stayed within narrow bands
Oil prices got a little more support after Saudi Crown Prince Mohammed bin Salam reportedly said he backs extending production cuts beyond March.
Equity traders are drooling over today’s earnings reports from Google Amazon, Facebook and Microsoft
USDCAD Technical outlook:
The intraday and short-term USDCAD technicals are bullish. The break of resistance in the 1.2740-80 area set the stage for further gains to 1.2950 and possibly 1.3130 (61.8% Fibonacci retracement of May-September range). For today, USDCAD support is at 1.2770 and 1.2720. Resistance is at 1.2820 and 1.2880.
Today’s Range 1.2770-1.2840
Chart: USDCAD 30 minute