The greenback stayed bid ahead of the New York open. Fresh comments from Cleveland Fed President Loretta Mester that rates should go up, sharpened the focus on Fed Chair Yellen’s speech, due at 1:00 pm EST.
A small dip in US Treasury yields was enough to push USDJPY back from 114.46 to 114.08. Domestic data was mixed. CPI was “as expected” while Household Spending dropped 1.2%, year over year in January. However, US rate hike concerns moved back to the forefront and USDJPY rallied to 114.45 at the New York open.
The Caixin China Service PMI data dipped to 51.3 in February from 51.9 in January. That news spooked antipodean traders who sold AUDUSD and NZDUSD, although the declines were modest.
EURUSD traders gave up on trying to drive below 1.0495 and the single currency drifted higher throughout the overnight session. Eurozone Services PMI and Retail Sales were below forecasts but that didn’t stop traders from taking the single currency to 1.0543 when New York walked in. A new French poll showed Emmanuel Macron ahead of right winger, Marine Le Pen, in the first round of the French presidential election. That news may have provided a bit of support to EURUSD.
Sterling meandered aimlessly until the UK Services PMI data was released. The 53.3 print was below the 55.1 forecast and GBPUSD dropped from 1.2263 to 1.2221
Asia equity indices followed US indices lower while Eurozone indices were mixed
Oil prices stopped falling and consolidated their recent losses within a $52.63-52.90/barrel range.
USDCAD inched higher throughout the overnight session and is currently probing resistance just below 1.3420. Diverging Canada/US interest rate spreads, weak domestic data and a doveish Bank of Canada are undermining the Canadian dollar.
ISM Services PMI data is due this morning. A much stronger than expected print (forecast 56.5) would give the US dollar a boost as it would give more support to March rate hike hopes. A weaker than expected number would not have much impact with Ms. Yellen waiting in the wings. FX traders will be looking for the Fed Chair to echo her colleagues call for higher rates while looking for signs that the pace of rate hikes could change. It may be a quiet day until after the speech, due at 1:00 EST
|Close 4:00 pm EDT-Open 6:00 am EDT|
USDCAD Technical outlook:
The USDCAD technicals are bullish. The break of resistance at 1.3380 has hung a target on 1.3460. If that level breaks, USDCAD will re-test the January peak of 1.3598. A move below 1.3370 will extend losses back to 1.3320. The momentum indicators warn that USDCAD is overbought which could mean a period of consolidation before the next move higher. For today, USDCAD support is at 1.3370 and 1.3320. Resistance is at 1.3420, 1.3440 and 1.3480.
Today’s Range 1.3380-1.3480
Chart: USDCAD 4 hour
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