Kermit the Frog said it was not easy being green. FX traders said it was not easy being bullish-or bearish as both groups have been beaten with the ugly stick over the past month.
Overnight, the US dollar failed to build on Monday’s gains. And instead, traded sideways to lower.
AUDUSD got the ball rolling early. It was sold when the RBA policy meeting minutes were released. Traders thought they were dovish because the RBA expressed concern about a lack of wage growth. Those concerns evaporated a few hours later when RBA Governor Phillip Lowe warned that the next rate increase was “up. AUDUSD jumped from 0.7534 to 0.7583.
NZDUSD see-sawed in a 0.6791-0.6824 range torn between concerns about weak results from today’s GlobalDairyTrade Auction and broad US dollar weakness.
USDJPY was a non-event. It was stuck in a narrow range ahead of Wednesday’s FOMC meeting minutes and Thursday’s US holiday.
EURUSD was lively with a lot of travel time in a 1.1717-1.1756 range. German politics and ECB President Draghi’s dovish remarks yesterday weighed on the currency. Also, a Bloomberg story said that the ECB would only take very gradual steps to exit QE.
Sterling got bounced around. GBPUSD rose on the back of positive Brexit sentiment stemming from reports that the UK would raise their “divorce” bill settlement. Those gains vanished when a series of MPC members made dovish comments in inflation board hearings.
Oil prices are firm. WTI traded in a $56.35-$56.85/b range, supported by expectations for extended production cuts being announced at the Opec meeting on November 30.
USDCAD drifted higher overnight and touched 1.2834, before heading back down. Widening US/Canada interest rate differentials and BoC/Fed policy divergence are supporting prices.
USDCAD Technical outlook:
The USDCAD technicals are bullish while prices are above 1.2730, looking for a break above 1.2830 to extend gains to 1.2915 and then 1.3050. A break below 1.2730 would lead down to 1.2610. For today, USDCAD support is at 1.2790 and 1.2750. Resistance is at 1.2830 and 1.2880.
Today’s Range 1.2770-1.2840
Chart: USDCAD daily