Morning Commentary & Currency Insights – February 28, 2018

The U.S. dollar is broadly higher hitting a 3 week high after FED Chair Powell presented a bullish outlook on the U.S. economy prompting markets to speculate on four rate hikes in 2018 from the central bank.  A move and daily close above 90.56 on the dollar index will embolden dollar bulls to add long positions and target 91.00-91.75 in coming sessions.  Short term technical indicators are moving into overbought territory but month equity portfolio rebalancing may push this to the background as dollar buying is anticipated.  Today’s U.S. GDP will likely be granted some reprieve should a soft print emerge but see further dollar strength on a strong number.

USD/CAD broke above its 200 day moving average in this backdrop and has surged higher testing levels not seen since late December.  The federal budget didn’t even garner a reaction from markets, however, in fairness it is being widely panned as a political budget rather than a substantive economic program even at home.  We will follow general market themes until Friday’s Canadian GDP relase.