The word of the session in NY was chop, as this is precisely what markets did across the board. US equities opened the day with a bid tone but would eventually pare all gains and close flat on the day as carrying risk ahead of some major late week news (ECB, NFP) proved too rich for some. The price action in USD/JPY was a testament to the overall flavor as the pair ranged from about 88.55 to 89.10 all session. For the short-term players, we would be on the lookout for potential stops lurking ahead of the 88.40 area now (good support). EUR/USD meanwhile, remains in the wide 1.3440/1.3700 range staked out since early last week and we would be surprised of much changed on this front over the next few days. While the pair could see a squeeze back to the top of this range (on an off-chance that the ECB is a touch more hawkish than expected this Thursday), we remain of the view that the path of least resistance is still lower here.

The data docket was devoid of economic events aside from the Bank of Canada rate decision. The bank decided, as expected, to maintain rates steady at 0.25% and thus the focus quickly shifted to the nuances of the press release. We think the statement was bullish for the Canadian dollar overall. The committee essentially marked up their assessment of economic growth, while noting that core inflation has been slightly above expectations. Their tone with regards to Canadian dollar strength was unchanged (still concerned it could negatively impact growth) and they reaffirmed their line in the sand at June 2010 in terms of when they would be open to begin moving on rates. The rate decision ultimately remains tied to the inflation outlook and thus should we see significant heating up on this front, we could see the BOC's hand forced ahead of time. This is not our base case, but definitely something for the USD/CAD bulls to keep in mind.