New York FX markets were a tad whippy in early trading. A host of economic reports delivered a mixed message, in part due to data disruption from Hurricane Irma. EURUSD has been bouncing in a 1.19556-1.1992 range, USDJPY slipped, and GBPUSD rallied.
President Trump’s 7:30 am PDT is the marquee event of the day. Markets are nervous and justifiably so. Normally, presidential UN speeches are ho-hum affairs, but that was in the era when Presidents were presidential. President Trump is a loose cannon, on a rolling deck, in high seas.
Overnight, the US dollar clawed back some of the yesterday’s losses as US treasury yields eased.
AUDUSD climbed from 0.7960 to 0.7999 following the release of the RBA minutes. The minutes were “upbeat,” supporting the currency.
NZDUSD followed AUDUSD higher with broad US dollar selling pressure contributing to the move.
USDJPY bounced in a 111.38-111.87 range with gains capped by softer Treasury yields. There is still chatter that Japanese Prime Minister Shinto Abe will call a snap election. The Nikkei had a good day, rising 1.96% to close at 20,299.38
EURUSD drifted higher rising to 1.2005 from 1.1951 in pre-FOMC positioning. The German ZEW data was better than expected which provided additional support.
Sterling tried to recoup some of the losses which occurred after Bank of England Governor Mark Carney tried to downplay UK rate hike risks. The rally hit a wall at 1.3550 and prices dropped to 1.3470 before recovering to 1.3535.
Oil prices rallied throughout the session due to on-going support from last week’s forecasts of rising demand and the impact of production cuts. WTI rose from $49.81.$50.35
USDCAD consolidated yesterday’s gains. On Monday, Bank of Canada Deputy Governor Timothy Lane said “As the Canadian dollar is strengthening, we are certainly watching that closely and will be taking that into account pretty strongly in making our decisions.” Those words spooked some traders into covering “stretched” short USDCAD positions. USDCAD soared to 1.2334 from 1.2220 but did not extend the rally overnight.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish with the break of resistance at 1.2240 targeting additional gains to 1.2330 and then 1.2440. Price action above 1.2288 (38.2% retracement of August 1.2661 peak and September 1.2060 low) opens the door to 1.2430, the 61.8% Fibonacci retracement level For today, USDCAD support is at 1.2240 and 1.2210. Resistance is at 1.2310 and 1.2340
Today’s Range 1.2240-1.2340
Chart: USDCAD 4 hour