The European Central Bank (ECB) left interest rates unchanged and dropped their easing bias which was mostly expected. EURUSD was very jumpy as the statement was released but quickly settled back to pre-statement levels. Overnight, EURUSD traded quietly in a 1.1240-70 range but slipped to 1.1230 when New York opened.
In some corners of the FX market, today has been billed as “Super Thursday.” The moniker is a doff of the cap to today’s potential market risks which are the European Central Bank meeting, ex-FBI Director Comey’s Senate testimony and the UK election.
So far, the ECB meeting hasn’t lived up to its billing, although there is still hope as Mario Draghi’s press conference is ongoing.
For the Asia session, “super” was downgraded to “run of the mill.” Yesterday, Mr. Comey’s opening statement to the Senate Intelligence Committee was released. It didn’t contain any “smoking guns,” which diminished the anticipation for today’s Senate question and answer period.
Fortunately, China’s Trade data provided some ammunition for traders. China’s May exports surged 8.7%, soundly trouncing the 7.0% forecast and well above April’s 8.0% rise. AUDUSD and NZDUSD were supported on the news.
USDJPY erased yesterday’s New York afternoon gains following the Comey letter release during the Toyo morning. USDJPY fell from 109.93 to 109.38. Those losses were quickly recouped on a falling Nikkei and a rise in Treasury Yields. News of another North Korea missile launch was ignored.
Sterling held steady as Brits headed to the polling booths. Prime Minister Theresa May has a slim 7-point lead over Labour in the polls. The polls close at 10:00 pm UK time (5:00 pm EDT) which means the UK vote won’t be a factor until Asia opens.
Oil prices have found a bit of a floor after yesterday’s nearly 5.0 percent plunge The US EIA surprised markets when they reported that crude inventories increased by 3.295 million barrels. Traders were looking for a decline of 3.46 m/b. WTI prices dropped from $48.07 to $45.63. They spent the night trading in a $45.79-$46.14/b range and are currently hovering around $46.00/b. level.
USDCAD reacted to yesterday’s oil plunge by climbing from 1.3429 to 1.3522. It spent the overnight session in a narrow 1.3502-1.3518 range with price movement tied to oil and US dollar sentiment.
The ECB press conference and ex-FBI Director Comey’s Senate testimony will be the trading focus today but it appears that neither one will provide the hoped for drama.
USDCAD Technical outlook:
The intraday USDCAD technicals turned bullish with yesterday’s break above the June downtrend line at 1.3490 and have set the stage for resistance in the 1.3660 area to break, if 1.3530 is decisively broken, which represents the downtrend line from the May 4 peak of 1.3792. Failure to do so, would keep 1.3400 in play.
The uptrend from the May 25 low is in place while prices are above 1.3470. For today, USDCAD support is at 1.3490, and 1.3460. Resistance is at 1.3530, 1.3560 and 1.3590.
Today’s Range 1.3470-1.3560
Chart: USDCAD 1 hour with WTI oil prices overlaid
Source: Saxo Bank