USDCAD broke below support in the 1.3320-30 area, which had contained downside moves since March 21. Canadian Industrial Product Price and Raw Material Price Index for February (traditionally non-factors for FX traders) were viewed in a positive note alongside a jump in WTI oil prices.
Q4 US GDP data was 2.1%, beating the 2.0% forecast while the weekly Initial Jobless Claims report was a tad better than last week’s release. Taken together, the US data was a non-factor as the GDP data is rather old and the Jobless Claims data was higher than forecast.
|Close 4:00 pm EDT-Open 6:00 am EDT|
The oil price rally which began on Monday found a short-term ceiling overnight. WTI was capped at $49.72 and opened in New York where it closed on Wednesday. Reuters reported that North Dakota oil production will rise next month when the Dakota Access Pipeline opens for business. US Traders saw the overnight drop as a buying opportunity and WTI is flirting with Resistance in the $50.00/b area.
In Europe, German March HICP (Harmonized Index of Consumer Prices) was lower than forecast, (Actual 1.5% vs. forecast 2.0%) supporting recent ECB officials claims that monetary policy had not changed. Earlier, ECB officials including the “unnamed source” told markets that the ECB still needs a lot of monetary policy stimulus.
Sterling was quiet and consolidated the losses when Article 50 was triggered.
Asia FX opened with traders digesting a series of relatively hawkish opinions from Fed officials during the New York. On Wednesday, Chicago Fed President Charles Evans suggested that he supports 1-2 additional rate hikes in 2017. His colleagues, Boston Fed President Eric Rosengren and San Francisco Fed President were on board for three or four hikes.
The hawkish Fed tone gave USDJPY a bit of a bid. It opened in Asia at 110.98 and rose to 11.41. That was it. USDJPY bounced inside that band until opening in New York at 111.10.
A rebound in February New Home Starts in Australia (Actual 0.2% vs. January -2.2%) gave AUDUSD a lift. The rally was capped at 0.7674 which is where AUDUSD opened in New York, after trading in a narrow 0.7652-0.7674 range overnight.
Kiwi drifted lower in Asia and Europe, undermined by the hawkish US rate chatter and opened in New York at 0.7013, just above the overnight low.
Today’s focus is on Friday’s US February PCE data, Michigan Consumer Sentiment, and Canada January GDP. Fed officials, Kaplan and Williams will be giving speeches but they have talked a lot this week, so they probably won’t offer anything new
USDCAD Technical outlook:
USDCAD remains trapped inside a 1.3330-80 range but it has a modestly bearish bias. A break below support in the 1.3320-30 zone should extend losses to 1.3260. Below 1.3260 opens the door to a straight shot down to 1.3160. A break above 1.3380 targets 1.3450. For today, USDCAD support is at 1.3320-30 and 1.3260. Resistance is at 1.3360, 1.3380 and 1.3405
Today’s Range 1.33290-1.3360