North Korea makes a Splash

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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.

Overnight Ranges






USDCAD 1.3390 1.3413 1.3379
EURUSD 1.0592 1.0540 1.0503
USDJPY 113.76 114.47 114.08
GBPUSD 1.2263 1.2281 1.2216
USDCHF 1.0099 1.0136 1.0113
AUDUSD 0.7593 0.7575 0.7545
NZDUSD 0.7019 0.7065 0.7023
USDMXN          19.4850 19.5837 19.4863
WTI   53.04 53.34 52.79
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




Further Reading


Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

New Year Optimism Retreats on US/Iran Tension

The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020


Posted to: News

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.

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