• EUR/USD -0.3%
• NZD/USD +0.6%
• USD/CAD +0.4%

EUR/USD

Skeptics Surround U.S. Deficit: Euro bidding dissipated later on in the overnight session ahead of the trade balance figures early in New York.  Subsequently, with selling pressure, stops below the range low of 1.2140 were set off contributing to dollar buying on a better than expected narrowing of the U.S. trade balance.  For the month of February, the overweight deficit narrowed by 4.1 percent, placing the figure below the record $68.5 billion seen in the previous month. Additionally, sentiment was heavy on thin central bank diversification attempts on the session adding to greenback bidding.  However, the Euro regained composure later on in the session following bids from Russian and Middle Eastern parties, stabilizing the pair at the 1.2100 handle.  Speculation also mounted during the session as market participants questioned the sustainability of a narrowed deficit.  Nonetheless, further focus looks to be placed on tomorrowââ,¬â"¢s retail sales figures and consumer confidence as a shortened week will leave Friday bland.  Should both report higher, participants should see a brief test of the 1.2050 floor.  

Rumorville: Further bidding looks to enter on the 1.2070 figure with corresponding stops below at 1.2025.  Establishing the lower bar, selling atop the 1.2100 handle remains to keep any fluctuations in the Asian session muted.  Offers are heavy at 1.2130 and 1.2170.

NZD/USD

Cross Bidding Holds Major Higher: Increased speculation on a teetering economy is keeping the Kiwi bid throughout the session.  Already released at the New York open, Kiwi manufacturing surveys were higher on the month and reflect the positive effects of a depreciated currency.  As a result, speculation is running higher of a positive gain on retail sales figures for the month tomorrow and even better consumer price data next week.  Coupled with NZDJPY cross pair buying, the pair looks ripe to tick slightly higher.  However, conditions remain tepid with no directional bias in the current market setting.  Nonetheless, the underlying major looks to do well with cross staying bid , notably in the NZDJPY and EURNZD cross as carry trade possibilities remain favored.  Thursdayââ,¬â"¢s retail sales data looks to show improvement with consensus figuring a 0.3 percent pickup.

Rumorville: Some selling has entered on the dayââ,¬â"¢s advance, located at 0.6160 and 0.6165.  Subsequently, bidding interest looks sparked at the 0.6125 figure with follow ups slightly below.  Influencing the pair looks to be heavy offers in the NZDJPY cross at 73.

USD/CAD

Commodity Dips, Dollar Crunches Higher: Short covering and momentary weakness in commodities boosted the USDCAD currency higher on the session as loonie demand was unable to penetrate the 1.1430 session low yesterday in New York.  Gold bullion and crude oil took hits on the day with crude oil dipping slightly on a larger than expected rise in U.S. inventories.  However, economic fundamentals continue to remain underpinned in the worldââ,¬â"¢s ninth largest economy as the regionââ,¬â"¢s merchandise surplus widened.  Notably, however, both import and export components fell leaving some to second guess the current read.  As a result, tomorrowââ,¬â"¢s manufacturing shipments survey will contribute to some of the action, with commodities still a concentrated concern.  The report looks to be further muted as U.S. data is likely to crimp Canadian results.

Rumorville: Selling pressure remains heavy into the Asian session with offers at 1.1495 and stops above at 1.1505.  The level coincides with the spike high seen over two consecutive sessions witnessed previously on the week.  Bids are comparably located at the level of 1.1470 with further buying interest below at 1.1430 and 1.1415.  Stops surround the 1.1400 handle.

Richard Lee is a Currency Strategist at FXCM.