North Korea launched four ballistic missiles, three of which landed in the Sea of Japan. That was also the launch of a bout of risk aversion trading in Asia
Japanese officials were not happy with North Korea’s actions. “(The test-firing) clearly shows that North Korea is now a new level of threat.” Said Japanese Prime Minster Abe. (Source: The Japan Times)
USDJPY gapped lower on the Asia open, falling from 114.12 to 113.73. The gap was quickly filled and then USDJPY spent the entire overnight session bouncing within a 114.12-113.55 range.
Antipodean traders were initially spooked by the North Korean actions but the moves were minor and unwound quickly.
China announced that it had lowered it’s 2017 growth forecast to 6.5%, down from 6.7% in 2016
AUDUSD traded in a 0.7570-0.7607 range and opened in New York at 0.7590. Australia Retail Sales were higher than expected (Actual 0.4% vs previous-0.1%). Traders were focused on Tuesday’s RBA interest rate announcement.
EURUSD traded sideways in Asia and got choppy in Europe due to French political developments. EURUSD rose and fell within a 1.0580-1.0638 band.
Sterling headed lower in Europe dropping from 1.2291 to 1.2248, weighed down by Brexit issues and concerns ahead of Wednesday’s UK budget.
Oil traders were nervous due to the downgraded China growth forecast and concern about Russia’s compliance with Opec production cuts. WTI has chopped around within a $53.34 -$52.75 band, with a negative bias.
USDCAD traded quietly within a narrow range but with a bullish bias due to divergent Canada/US interest rate policies.
There isn’t any Canadian or US data due today leaving FX traders to mull over Fed Chair Janet Yellen’s speech from Friday. Ms. Yellen echoed her colleague’s remarks suggesting that a March rate hike was very possible. The odds are now 80% in favour of a hike according to the CME FedWatch tool. Friday’s US employment data would have to be absolutely horrible to derail a move.
|Close 4:00 pm EDT-Open 6:00 am EDT|
USDCAD Technical outlook:
The USDCAD technicals are bullish while trading above 1.3370 looking for a break above 1.3460 to extend gains to 1.3600. A break below 1.3370 would target 1.3310 and then 1.3260. For today, USDCAD support is at 1.3370 and 1.3330. Resistance is at 1.3420 and 1.3460.
Today’s Range 1.3370-1.3340
Chart: USDCAD 4 hour
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