- US Durable Goods and Consumer Confidence data ahead.
- Fears of a partial US government closure starting to percolate.
- US dollar opens little changed from Monday.
USDCAD: open 1.3493, overnight range 1.3489-1.3529, close 1.3506, WTI $77.43, Gold, $2036.67
The Canadian dollar continues to trade sideways in its well-defined USDCAD range of 1.3450-1.3550 due to a dearth of top-tier data and trading catalysts. Traders are looking for a reason to get involved but are struggling.
Oil prices are not helping the Canadian dollar move in either direction. West Texas Intermediate has been trapped in a $70.00-$80.00/barrel range since the middle of November, and that needs to break before USDCAD traders react. OPEC and the International Energy Agency (IEA) are forecasting that crude supply will outstrip demand for most of 2024 due to China’s sluggish economy and strong US oil production.
Risk sentiment is starting to curdle as the March 1 US debt ceiling deadline nears. Congress needs to approve new funding, but as usual, the Democrats and Republicans cannot agree on the amount or how the money will be spent. President Biden is meeting with Congressional leaders today. Politicians will be extra motivated to do a deal as it is an election year, and no one wants to add fuel to already angry voters.
EURUSD traded with a modestly negative bias in a 1.0842-1.0866 range with traders digesting comments from ECB President Christine Lagarde yesterday. She said that although inflation is expected to head lower, policymakers will need to see more evidence that the downtrend is sustainable.
GBPUSD traded in a 1.2671-1.2697 range with mixed risk sentiment and upcoming US data today, hampering trading activity.
USDJPY traded in a 150.12-150.71 range. Hotter-than-expected January inflation (CPI-ex-food actual 2.0%, forecast 1.8%, previous 2.3%) reinforced hopes that negative rates would end in April. However, extreme short USDJPY positioning limited the downside.
AUDUSD drifted in a 0.6525-0.6550 range on the back of mixed risk sentiment and weaker iron ore prices. Traders were also cautious ahead of the January inflation report tomorrow. (CPI forecast 3.5% vs. December 3.4% y/y)
The US economic calendar is busy. January Durable Goods Orders (forecast -4.5%, December 0%), Case-Shiller Home Price Index (December forecast 6.0%, November 5.4%), and Consumer Confidence are on tap.
