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Market consolidating before major event risks

Posted on: November 01, 2017

Overnight, all the major currencies traded in a tight range ahead of the Fed announcement at noon. The only exception is the yen which is underperforming after BOJ’s decision to hold rate unchanged at 8-1 vote on Monday. The expectation for today’s Fed announcement is to hold rate unchanged until December which is 85% priced in.

CAD is on its back foot after yesterday’s miss in GDP, actual of 3.5% vs expected of 3.6%. USDCAD traded up to 1.2915 on the miss and has been grinding in a tight range between 1.2870/2910 since. Although the GDP missed expectation, 3.5% growth is still a great number considering the big picture. Canada’s economy is still humming along and confidence seems to be shown in the all time TSX high. Hence, I think the recent 9 big figure rally in USDCAD is due for at least a pause here. I wouldn’t be surprised if it trades back to 1.24/25 area in a month or two. With the major 1.30 level just a figure above here, the risk/reward looks good for USDCAD seller here.

Besides the Fed announcement today, we still have some major event risks in Bank of England on Thursday and Dual Job numbers for Canada and US. Bank of England is due to raise its rate for the first time since 2009 which may mark a change in the tide. The only question is if it’s a one off hike or a steady path to further increases. The market seems to be expecting the former for now.

For those of you that would like to have the ability to execute your FX needs after hours in the overnight sessions or would simply prefer to execute electronically and have not yet been introduced to our ATB FX Online Platform please contact the sales desk and someone will be happy to set you up with access.

    Previous Day’s NA Range 1.2823 - 1.2915
  • Overnight range 1.2872 - 1.2909

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