USD/CAD - Canadian Dollar Remains Rangebound

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The Canadian dollar is bouncing about inside a USD/CAD range of $1.3290-$1.3380. Broad U.S. dollar strength is being somewhat offset by steady to firm oil prices. Yesterday’s European Central Bank (ECB) policy meeting, the minutes from the U.S. Federal Reserve meeting of March 20 and news of another Brexit extension failed to spark any FX volatility. Instead, the major currency pairs continue to probe support and resistance levels without the impetus to trade outside the well-established trading bands.

The ECB policy meeting was a dud for EUR/USD traders. They left interest rates unchanged and said they would remain unchanged for the duration of 2019. ECB President Mario Draghi described his outlook for the euro-zone economy with "continuing confidence and increasing caution." But just in case anyone understood his comments to be even slightly hawkish, he said the risks to the outlook are to the downside. EUR/USD didn’t get any traction in either direction and settled for a narrow $1.1274-$1.1286 range overnight.

Yesterday, the Fed released the minutes from the March 20 FOMC meeting. The minutes confirmed the view that the Fed is on hold for the rest of the year. The Fed says they are data dependent, which suggests that higher inflation numbers may result in a rate increase sooner than expected.

U.K. Prime Minister Theresa May successfully lobbied the European Union to grant her another extension to article 50. She got it. Instead of crashing out of the E.U. on Friday, without a deal, the U.K. has until October 31 to agree to May’s Brexit plan, or come up with another plan agreeable to the E.U.. If so, Britain can leave earlier. If not, it must negotiate another extension or risk going without a deal — same problem, different end date. GBP/USD barely reacted on the news, and its lack of movement dampened trading enthusiasm in the rest of the G-10 major currencies.

The Canadian dollar is struggling to extract additional support from West Texas Intermediate (WTI) oil prices that are hovering around the $64.00/barrel area. WTI dropped from $64.66/barrel yesterday after the U.S. Energy Information Administration (EIA) said that crude inventories rose 7.03 million barrels in the week ending April 5.

Prices got a little support in Europe this morning after the International Energy Agency (IEA) released their April Oil Market Report. The IEA noted a 2.2-million-barrel/day drop in oil production in March compared to November. It added that non-Organization of the Petroleum Exporting Countries output in Q1 was 700,000 barrels per day lower than that of Q4 2018. The IEA also said that tightness in the oil market was just from supply cuts but due in part to the resilience of demand. Then it warned of mixed signals suggesting that demand could falter and prices slipped.

U.S. weekly Jobless claims, PPI and Canada New Housing price index data releases are due today.

Rahim Madhavji is the President of, a Canadian currency exchange that provides better rates than the banks to Canadians

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