Overnight Range 1.3038-1.3075
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US Dollar from NY close-July 20 (4pm) to 6:00 am PST July 21st
The pot was ripe for stirring and four central banks were up to the task. It started in early Asia when the Reserve Bank of New Zealand released an economic assessment that set the stage for an August rate cut citing a weakened inflation outlook (which was blamed on the exchange rate). NZDUSD plunged from 0 .7027 to 0.6950. It has since bounced back to 0.7000 area
Also in Asia, USDJPY got a boost on a Kyoto News Agency report that the government would introduce a 20 trillion-yen stimulus package. USDJPY dealt at 107.48 on the news. The certainty of another Bank of Japan(BoJ) easing program became rather uncertain by mid-morning in Europe. That’s when BoJ Governor Kuroda told a BBC interviewer that “I don’t think at this stage we should abandon this institutional setting. No need and no possibility for helicopter money”, according to Reuters.
Trader’s took that to mean that the prior Kyoto News agency story of a new 20 trillion stimulus program may just be wishful thinking and they sold USDJPY aggressively. USDJPY hit 105.43. It is 106.11 as of 6:00 am PDT.
And there’s more. A UK MPC member, Kristin Forbes wrote an article for the Telegraph urging policy makers to take their time to assess the impact of the Brexit decision before adjusting rates. GBPUSD remained supported and was testing 1.3250 before Kuroda’s comments triggered GBPJPY selling. UK Retail Sales data was soft.
EURUSD traded with a bid tone in a narrow range with traders patiently waiting for today’s ECB statement and press conference. The ECB left rates unchanged and a cautious and patient sounding Draghi gave EURUSD a lift from 1.1005 to 1.1060.
USDCAD trading was just an after-thought. The overnight peak of 1.3070 was seen in very early and thin Asia markets then the Loonie drifted higher into the New York open supported by modestly higher oil prices. StatsCanada reported a 1.8% gain in Wholesale Sales which only had a short lived impact on USDCAD.
USDCAD technical outlook.
The intraday USDCAD technicals are mixed. The intraday uptrend from Friday was broken with the move below 1.3060 overnight while the very minor downtrend from yesterday’s 1.3090 peak remains intact while prices are below 1.3070. A break of 1.3020 would extend losses to 1.2970 while gains above 1.3100 target 1.3150.
Longer term, resistance in the 1.3085-1.3100 needs to be taken out which will set the stage for a move to the 1.3150-1.3200 zone. A decisive break below 1.3020 means additional range trading in a 1.2900-1.3100 band is likely.
Today’s Range: 1.3010-1.3090
Chart: USDCADS hourly