Morning Commentary & Currency Insights – January 9, 2018

The U.S. dollar is mixed as we walk into the North American open with no significant data releases scheduled for release today.  JPY strengthened after the BoJ reduced its regular purchase of long dated bonds prompting conjecture of a shift away from an easy monetary policy.  Sterling has weakened amidst a cabinet reshuffle where two top ministers refused to be moved while the euro retreated lower after its failure to successfully breach the 1.2000 hurdle is causing players to liquidate weak long positions.

USD/CAD is unchanged with expectations that range trading between 1.2350-1.2450 ahead of next week’s BoC rate announcement will prevail.  Yesterday’s BoC Business Outlook Survey was modestly upbeat as expected but was largely ignored by market participants as it was perceived to be baked in to current pricing levels.  Looking beyond the BoC sees NAFTA discussions taking place in Montreal from January 23-28 which will create further uncertainty as to the fate of CAD.  Oil trading above $62 remains supportive of CAD despite the continuing discrepancy between its Western Canada Select counterpart adding to opposing views on our currency’s fate in the long run.