Overnight Range 1.3498-1.3586
FX markets continued to be stirred up by Donald Trump’s election victory and in New Zealand, shaken by a 7.8 magnitude earthquake. The olive will be the Italian Referendum (Senate and Regional government reforms) on December 4.
The US dollar started the week with a bid supported by rising US Treasury yields, hawkish comments from Fed Vice Chair Fisher last week.
(“The case for removing accommodation gradually is quite strong, The Fed was “reasonably close” to meeting its target of a stable 2% inflation rate and full employment, which justifies action, he said. Fed Vice Chair Fisher-Source MarketWatch.com)
China data was mixed. Retail Sales were 10%, y/y vs. forecast for a rise of 10.7% while Industrial Production was unchanged at 6.1%. Aussie traders looked at the US dollar sentiment and the China date then sold AUDUSD. The losses were recovered by the New York open. No so for Kiwi. NZDUSD dropped in concert with Aussie. The Christchurch earthquake exacerbated the move.
EURUSD dropped from 1.0840 in Asia to a low of 1.0727 in Europe and then bounced back to 1.0782 by the New York open. Sterling traded in a similar fashion, down and then up.
Oil prices traded steadily at the low end of last week’s range but dropped below $43.00/b in early New York trading. Pessimism surrounding the success of potential Opec production caps combined with last week’s negative oil outlook by IEA is behind the move.
USDCAD broke above the 50% Fibonacci retracement level of the 2016 range (1.3570) bolstered by general US dollar strength an low oil prices.
EURUSD traders will be listening to Mario Draghi’s speech at 10 am EST looking for clues on the ECB’s QE plans, ahead of the next meeting. There isn’t any US or Canadian data of note leaving traders to focus on rumours of Trump’s Cabinet appointments.
USDCAD technical outlook
The intraday and short term USDCAD technicals are bullish. The break above the 50% Fibonacci retracement level of the 2016 range shifts the focus to the 61.8% level which is 1.3837. The intraday technicals are bullish while prices are above 1.3540. A move below this level will extend losses to 1.3480. For today, USDCAD support is at 1.3540, 1.3510 and 1.3480. Resistance is at 1.3585 and 1.3630.
Today’s Range 1.3520-1.3620
Chart: USDCAD 1 hour