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– Kiwi Crashes After RBNZ

– Oil Bounce Helps Loonie Recover

– Parliament Gives Brexit Green Light


Good morning. It would appear foreign exchange markets are grinding to a halt underneath another massive snow storm. As three inches fall every hour in the northeast USA, major currencies are struggling to grind three pips as traders search for momentum. The US dollar’s recent rise has come to a halt, losing a bit of ground overnight to commodity currencies and the pound. Today’s biggest loser though is the New Zealand dollar, which fell off a cliff after policy makers announced the main rate would stay at 1.75 percent and hinted at delaying any future hikes. Earnings season continues to drive sentiment with a light data calendar in the US and Canada.

The New Zealand dollar is down more than 0.50 percent after policy makers announced current policy would not be changed, as was expected. What caught the markets off guard was a more dovish statement, accompanying the announcement. Governor Wheeler proclaimed that policy “will remain accommodative for a considerable period,” underscoring divergence between the US just about every other major central bank. It was an otherwise quiet trading session during Asia hours, as the yen gave back Wednesday’s gain amid a modest bounce in risk appetite. The whippy trade continues for sterling, which is more than 200 points off this week’s lows. Late Wednesday, the lower house of UK’s Parliament voted in favor of giving PM May the power to trigger Article 50. It is expected the process to allow the country to leave the European Union could take up to two years. The euro is unchanged as we go to print this morning. The single currency was initially dragged higher with Sterling but the rally has petered out.

It was an extremely quiet North American session on Wednesday. The greenback appeared to be stuck in the mud versus every major currency, which spilled over into Thursday. Equities were a mixed bag once again, as yields tipped lower which weighed down the greenback even more. This morning, we get a look at the American labor sector with weekly jobless claims. It is expected that 246k Americans filed first-time unemployment claims during the week ending February 3rd. At 10:30am ET, the US Energy Information Administration will show unveil crude stock changes for last week, +940k is expected. Crude prices fell as much as $3-per-barrel this week, a result of the suddenly resurgent US dollar, but recovered nicely today on better than expected European earnings.

The Canadian dollar has been one of this week’s worst performing currencies, driven lower by those same falling crude prices. Recent stability has helped the Loonie, but it’s been a meager bounce today. It’s been a quiet week up north, with limited data releases to guide price action. On Wednesday, it was reported that Canada’s trade surplus narrowed to $920 million CAD in December, driven by exports which were up 0.8 percent on the strength of higher energy prices. It was reported 207.4k housing starts for the month of January as that sector continues to run hot. The Bank of Canada’s Schembri will speaking just before lunch today and the week closes down tomorrow with January’s employment report. It is expected that employers shed 13k jobs to begin the new year, following a massive 53.7k print in December, motivated by full-time jobs. The USD/CAD rate remains above psychological support levels.

Have a great Thursday.

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