USDCAD is hovering at Friday’s low. Traders are unphased by US dollar gains elsewhere and content to focus on Canadian data and Wednesday’s Bank of Canada policy meeting.
The Bank of Canada is expected to leave interest rates unchanged. (although the slight odds of an increase, improved a tad, after Friday’s jobs data) However, the October policy statement warned that “less monetary policy stimulus will likely be required over time” and “the Bank will be guided by incoming data.” Friday’s data opened the door a little bit further to a January or February rate increase, suggesting that Wednesday’s statement could be on the hawkish side.
Overnight, the US dollar recouped all of Friday’s losses. On Friday, news that former US National Security Advisor Michael Flynn pled quilty to lying to the FBI, knocked the greenback for a loop.
However, near the end of the day, the Senate passed the Republican tax bill.
In Asia and Europe Michael Flynn and his legal troubles were forgotten. US dollar demand from expected tax cut stimulus boosted the greenback across the board.
EURUSD closed at 1.1890 on Friday and gapped lower at the Asia open, starting at 1.1878 and dropping to 1.1837 in Europe. Eurozone data was mixed. Sentix Consumer Confidence dipped to 31.1 from 34.0 previously while Oct PPI ticked higher to 0.4% from 0.3%, m/m.
GBPUSD gapped lower, but that gap was filled, in a rollercoaster of a session. GBPUSD was up and down inside a 1.3420-1.3512 range. UK PM May is meeting with the EU’s Juncker and Tusk today. Ms May is hoping that her upgraded divorce offer will lead to the start of trade negotiations. A failure to get a deal would crush GBPUSD.
USDJPY rallied at the Asia open and never looked back. Prices rose to 113.05 from 112.54
AUDUSD is close to where it closed on Friday, supported by modestly better than expected data and higher commodity prices. NZDUSD underperformed.
Oil prices slid falling from $58.26 from $57.70 due to an increase of two more rigs, according to Baker-Hughs and profit-taking.
US equity futures are pointing to a strong opening on Wall Street. Asia stock markets closed mixed while European bourses are higher.
There isn’t any data of note from the US or Canada. FX traders will take their trading cues from Wall Street, oil prices and headlines about Trump/Russia or tax reform.
USDCAD Technical outlook:
The USDCAD technicals are bearish. The failure to extend gains above 1.2915 and the subsequent drop below support at 1.2810 and 1.2750 has set the stage for a steeper drop to 1.2460. The USDCAD version of the “Maginot Line” is 1.2660. Will it be successfully defended or will fall to the “Blitzkrieg Bop?” For today, USDCAD support is at 1.2660 and 1.2590. Resistance is at 1.2705 and 1.2740.
Today’s Range 1.2610-1.2705