The US dollar opened in New York with a firm tone recording gains against the G10 currencies. Traders dismissed worries about rising US budget deficits and turned their attention to Wednesday’s FOMC minutes release.The Japanese yen is the biggest loser (since Friday) followed by the Swiss Franc. US dollar demand has been encouraged by the rise in the US dollar index which broke resistance in the 89.40 area (hourly chart) and targets further gains to 89.90.
Asia FX volumes were lower than normal because the Chines New Year holidays are in full swing until Thursday. Japan announced a narrowing in the trade surplus on Monday, but it didn’t have any impact. USDJPY climbed steadily from Monday’s Asia opening of 106.20 to 107.19 at the New York open.
AUDUSD bounced in a 0.7883 to 0.7932 range. The RBA minutes didn’t offer anything new, and the currency traded softly into this morning open. NZXDUSD traded lower on broad US dollar demand.
EURUSD finished Friday on a bearish technical note and traded with a negative bias. .Better than expected Eurozone data including today’s ZEW Survey and progression with German election politics was ignored. Traders focused on the risk of higher US rates, faster.
GBPUSD traded choppily in a 1.3932-1.4045 range. The risk of higher UK rates has managed to slow the decline in Sterling although fresh Brexit concerns are weighing on the currency.
Oil prices are resilient due to hopes and jams. Reuters reports that Opec and non-Opec nations may discuss extending the supply cut agreement beyond 2018 at their June meeting. US prices are underpinned by reduced supply from Canada due to pipeline capacity issues.
USDCAD rallied in concert with broad US strength on increased Fed rate hike risks. The Bank of Canada is expected to be “cautious” and remain sidelined until they get more clarity on the Nafta negotiations while the Fed may become more aggressive. Canada doesn’t release any meaningful data until Friday when Retail Sales are due
USDCAD Technical outlook:
USDCAD technicals are bullish. The break above 1.2510 supported by additional gains above 1.2550 targets the 1.2650-80 area. . If broken 1.2915 is in play. A move below 1.2500 would negate the topside pressure and suggest further 1.2250-1.2650 consolidation. For today, USDCADF support is at 1.2560 and 1.2505. Resistance is at 1.2620 and 1.2650.
Today’s Range 1.2540-1.2620