The European Central Bank did what was expected and dropped the pledge to expand bond-buying if needed, which had appeared in every ECB monetary policy statement since 2016. Mario Draghi pointed out, in his press conference, that the ECB statement still includes the promise to run asset purchases until September 2018 or beyond. EURUSD drifted lower on the news.
The US dollar opened in New York with gains across the board except against the Japanese yen, which was unchanged. The greenback was rangebound but traded lower in Asia and then rebounded in Europe. Weaker than expected UK RICS Housing Price Balance survey results (Actual 0.0% vs forecast 7.0%) and a bit for US dollars drove GBPUSD from 1.3908 to 1.3861.
USDJPY opened unchanged after trading in a narrow range. Japanese Q4 GDP data surprised to the upside. (Actual 0.4% vs forecast 0.2%, q/q)
AUDUSD was supported by a higher than expected trade surplus and because of the possibility for tariff exemptions. Kiwi also benefitted. However, the gains were erased in the European session on broad US dollar strength.
Asia equity traders liked the easing of trade tensions and bought stocks. European traders were more focused on the ECB, and those bourses are mixed; FTSE 100 is flat and the DAX is down.
The Canadian dollar has been slapped about like the proverbial red-headed stepchild, in the past few sessions, pin-balling between 1.2860- and 1.2999, on the back of trade tariff headlines.
Yesterday afternoon chatter that Canada and Mexico would be exempt from Trump’s new tariff plan, as well as other nations on a “case-by-case” basis, eased trade war fears. President Trump will make his announcement at 1230 PT., today.
This morning’s US data (Jobless Claims and Challenger Job cut), is not a big deal. Canadian new Housing Prices Index and Building Permits data will be ignored. USDCAD traders will be hoping for insight into the Bank of Canada’s cautious policy statement yesterday when BoC Deputy Governor Timothy Lane speaks in Vancouver, (1550 ET)
USDCAD Technical Outlook
The intraday and short term USDCAD technicals are bullish while prices are trading above the 1.2850-60 zone. Rallies have been capped by resistance in the 1.2990-1.3000 area. A decisive break above 1.3050 would be significant. First of all, “big-figures” or “round numbers tend to be major support and resistance levels. The strength of the current resistance at 1.3000 implies that if broken, the level will become strong support. The break of 1.2925 (50% Fibonacci retracement level of the 2017, 1.2060-1.3790 range) targets the 61.8% level of 1.3125. For today, USDCAD support is at 1.2890 and 1.2860. Resistance is at 1.2960 and 1.3000
Today’s Range: 1.2890-1.2990