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Dollar Firms Following Fed

Categories: AUD, CAD, CHF, EUR, Markets, News, USD

The US dollar flexed its muscles after the FOMC meeting, yesterday afternoon.   The Fed raised the target range of federal Funds by 0.25% to 1.0-1.25%, which was well-telegraphed and almost unanimously expected. They tweaked some forecasts. Inflation is 2017 was lowered to 1.7% from 1.9% while GDP growth was nudged higher to 2.2% in 2017.

The biggest news was the announcement that balance sheet normalization will begin this year but in such a way that it wouldn’t have any impact on markets.

Despite, the news, the US dollar finished the day in New York with small losses against the G10 currencies except for the Canadian dollar and the Swiss franc.

In Asia, Australia reported a 42,000 rise in employment and a drop in the unemployment rate to 5.5%. from 5.7%.  AUDUSD rallied from 0.7584 to 0.7629. Broad US dollar strength reversed the move in Europe and AUDUSD dropped to pre-employment data levels by the New York open.

New Zealand Q1 GDP was 0.5% (forecast 0.7%, q/q).  NZDUSD dropped from 0.7266 to 0.7210 which is where it was at the open this morning.

USDJPY bounced within a 109.28-109.80 range and opened in New York at 109.76, almost unchanged from the close

EURUSD traded sideways in Asia but sank to 1.1153 in Europe.  The prospect of another US rate hike in 2017 while the ECB policy stays unchanged weighed on the currency pair.

GBPUSD traded lower in Europe, weighed down by UK politics and a weaker than forecast May Retail Sales report.  (Actual -0.9% vs. forecast 1.7%, y/y) Traders are waiting for the Bank of England policy announcement.

Oil prices consolidated in a $44.41-$44.78 range following yesterday’s plunge after the EIA Crude inventory report.  The combination of concerns over Opec production cut compliance, rising US production and the risk of weaker global demand have put oil bears in charge.

USDCAD is in consolidation mode as well.  The hawkish Bank of Canada policy shift and strong domestic data has served to give the currency a reprieve from falling oil prices.

Oil price swings, equity markets and US data will ensure a fairly frothy FX session today.  US data includes, jobless claims, import/export prices, industrial production capacity utilization, Philadelphia Fed manufacturing index and NAHB home prices.

President Trump’s political woes will also distract markets.  The Washington Post (anti-Trump newspaper) reported that the President is being investigated for obstruction of justice.

Overnight Ranges

15-Jun-17 Open-6 am EDT High Low
USDCAD 1.3278 1.3279 1.3227
EURUSD 1.1160 1.1227 1.1157
USDJPY 109.76 109.80 109.28
GBPUSD 1.2706 1.2759 1.2691
USDCHF 0.9746 0.9746 0.9704
AUDUSD 0.7587 0.7629 0.7584
NZDUSD 0.7220 0.7266 0.7210
USDMXN 18.0860 18.0924 17.9287
WTI   44.61 44.78 44.41

 USDCAD Technical outlook:

The intraday USDCAD technicals are mildly bullish inside a downtrend from the June 9 peak of 1. 3523..  A break above 1.3290 would lead to a test of the downtrend line which comes into play at 1.3360.  A break above 1.3360 would extend gains to 1.3420.  A move below 1.3240 suggests another test of 1.3160 support.  For today, USDCAD support is at 1.3240, 1.3210 and 1.3180.  Resistance is at 1.3290 and 1.3360.

Today’s Range 1.3240-1.3330.

Chart: USDCAD 30 minute

usdcad-30-min-chart

 

Agility Forex Author: Agility Forex

Agility Forex is a Canadian cross-border payment specialist. They are Canadian owned, operated out of Vancouver and are registered with Fintrac, the Canadian government agency that oversees the money transfer industry. They specialize in all things Canadian Dollar and aim to provide the best service and best pricing on all Loonie cross rates. Visit Agility Forex.

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