The Fed appears to have pushed the “pause button” on rate hikes. The FOMC minutes released yesterday afternoon indicated that “many participants” were in favour of being “patient about further policy firming.” Following the news, EURUSD closed with a 0.89% gain compared to its opening level. NZDUSD was the best performing major G-10 currency pair, rising 1.01%”.
The tone of the minutes seems to contradict the message delivered by Fed Chair Jerome Powell at his press conference on December 19. He changed his tune in a speech on January 4 and is addressing the Washington Economic Club today at noon hour. Dire Straits want to know if he will “flip, flop, or fly?”
The greenback started the New York session flat to slightly higher against the majors as traders digest the post-FOMC minutes price action. The major Asia equity indices closed on a mixed note. The Nikkei was down 1.29%, the Hang Seng and S&P/ASX 200 were modestly higher. European bourses are in negative territory, and US equity futures are a tad in the red.
USDJPY was under pressure all of yesterday and extended its losses overnight. A rally from the Asia low of 107.78 stalled at 108.28 with short term technicals warning of a steeper drop to 105.50
EURUSD retreated from its overnight peak on the back of profit-taking, although the short term technicals are bullish while prices are above 1.1470, supported by yesterdays break of key resistance in the 1.1505-20 area.
GBPUSD is somewhat resilient ahead of next weeks Brexit vote which Prime Minister May is expected to lose. GBPUSD tracked EURUSD lower overnight.
USDCAD sank yesterday and consolidated the losses overnight. Sharply rising oil prices have diminished, some of the Bank of Canada’s Monetary Policy Report concerns about oil. Perhaps the future may not be as grim as their prediction of a 12% drop in energy investment. WTI oil rallied overnight, rising from $51.47/b to $52.21/b and is currently trading at $52.00/b.
The BoC was cautious because of oil, but aside from that, they painted a relatively positive picture of the economy, leaving the door open for at least two rate hikes in 2019.
This morning’s US data includes weekly Jobless Claims. Canada releases Building Permits and Housing Price data. Traders will continue to take their trading cues from Wall Street who in turn will keep their eye on the US political drama
The intraday USDCAD technicals are bearish. The downtrend from the beginning fo January is intact while prices are below 1.3250, looking for a break of 1.3170 to extend to 1.3120 (the 38.2% Fibonacci retracent level of the 11 month 1.2255-1.3660 range. A break above 1.380 implies a period of 1.3180-1.3400 consolidation. For today, USDCAD resistance is at 1.3250, 1.3270 and 1.3320. Support is at 1.3180 and 1.3120.
Today’s Range 1.3180-1.3240 0000