- Canada Q4 GDP forecast 1.5% (Previous 2.9%).
- GBPUSD outperforms on EU/UK Northern Ireland deal.
- US dollar opens mixed ahead of month end flows.
USDCAD snapshot open 1.3565-69, overnight range 1.3563-1.3604, close 1.3575, WTI $76.89, Gold $1808.70
The Canadian dollar traded narrowly with a modestly bullish bias overnight with traders awaiting the December Q4 GDP data.
Canadian economic growth is expected to have slowed to 1.5% from 2.9% in Q3. The result is widely expected, and economists will have fun parsing the data. Unfortunately, the results are not likely to have much, if any, impact on USDCAD trading.
Traders are more focused on today’s US economic reports which include US Consumer Confidence, Case-Shiller Home price Index, the Richmond Fed Manufacturing Index and the Chicago Fed PMI index. In addition, it is month end and portfolio rebalancing flows may be disruptive.
The 2.31% drop in the S&P index in February suggests portfolio managers need to buy USDCAD. However, the overnight and early morning price action suggests the demand is not very sizeable.
Yesterday’s mixed US data, geopolitics and today’s month end portfolio rebalancing flows trapped FX markets in narrow ranges and led to indecisive price action in equity markets.
Asian equity closed with modest gains while European bourses are flitting either side of unchanged. S&P 500 futures have gained 0.14% (as of 6:45 am). Gold is down 0.38% while WTI is 1.55% firmer.
EURUSD traded higher in a 1.0583-1.0625 range, supported by higher than expected French and Spanish inflation data. The intraday EURUSD technicals are bullish above 1.0570, looking for further gains to 1.0640.
GBPUSD rallied from 1.1920 to 1.2062 yesterday on the news that the EU and UK reached a deal on the Northern Ireland Protocol, then extended the gains to 1.2108 overnight. However, the agreement news should be taken with a grain of salt. The UK has a history of agreeing to Brexit terms but signing the deal in disappearing ink. A decisive break above 1.2130 targets 1.2310.
USDJPY is at the top of its 136.12-136.84 range, underpinned by higher US 10-year Treasury yields and dovish comments from the BoJ
Governor and Deputy Governor nomination hearings. Potential candidates continue to insist that Japan’s easy monetary policy needs to stay.
AUDUSD traded in a 0.6705-0.6749 range with prices getting a boost from better-than-expected January Retail Sales (actual 1.9% m/m vs December -4% m/m) and a higher current account surplus.
