There is a whiff of hope in the air around the Trump/Jinping meeting this weekend. It was enough to put Asia equity indices into positive territory. Not so for European bourses. They are all in mildly in the red, in part because of Brexit and the EU/Italy budget dispute. The Wall Street Journal (WSJ) reports the two leaders are looking for an agreement to defuse tensions, and lift markets. The US would hold off imposing further tariffs, and China would hold talks about changing their economic policies.
FX markets were subdued in Asia but perked up in Europe after Eurozone economic reports were released. CPI was 2.05 in November, year over year, as expected. Core CPI slipped to 1.8% y/y (forecast 2.0%), and the Unemployment rate was unchanged at 8.1%. EURUSD dropped from 1.1387 just before the news to 1.1358 immediately afterwards. Prices have recovered to 1.1370.
USDJPY drifted higher in a narrow 113.35-53 range although the topside appears limited because of soft US Treasury yields. AUDUSD and NZDUSD are modestly weaker due to soft commodity prices.
Oil prices have been on a rollercoaster ride that would make Disney World’s Mr Toad envious. Traders keep bouncing between buying on hopes of production cuts by Opec and selling on rising supply fears. WTI touched $52.14 yesterday afternoon and the traded lower for the rest of the day, overnight and in early New York trading, touching $50.46/b.
USDCAD inched higher overnight, supported by the fall in oil prices and general, but mild US dollar strength. Traders do not have high hopes for today’s Canada Q3 GDP report, which is forecast at 2.0%, well below Q2’s 2.9% rate. The data will not be strong enough to force the BoC to raise interest rates next week.
The intraday USDCAD technicals are bullish. The uptrend channel from October has support at 1.3220 and resistance at 1.3390 on a daily chart with additional support at 1.3270. The intraday technicals are bullish above 1.3290, looking for a break of 1.3330 to extend gains to 1.3385. For today, USDCAD support is at 1.3290 and 1.3260. Resistance is at 1.3330 and 1.3385
Today’s Range 1.3270-1.3360