USDCAD rallied in concert with broad US dollar strength, yesterday and added to those gains in a dull, overnight session. There isn’t any domestic data until Friday’s Q3 GDP report. The Bank of Canada policy meeting statement is next week. (December 5) Meanwhile, USDCAD direction is dictated by US dollar sentiment, Wall Street price action and headlines around, Italy/EU, UK/Brexit and Trump/Jinping meeting on the weekend. The intraday USDCAD technicals are bullish. Yesterday’s break above resistance at 1.3280 put a target on the 2018 peak of 1.3385. Only a retreat below 1.3220 would negate the topside pressure. A break above 1.3385 opens the door to a test of 1.3520, last seen in June 2017. For today, USDCAD support is at 1.3290, and 1.3260. Resistance 1.3330 and 1.3385.
US Q3 GDP is expected to be revised upward to 3.6%, supported by a jump in non-residential construction. Fed Chair Powells speech at noon will be studied to see if he varies from his “gradual rate increase” theme
In Europe, EUR/USD was weighed down by the EU/Italy budget debate. Italy appears willing to tweak the budget deficit forecast to 2.2% of GDP from the original plan of 2.4% of GDP. European Commission Vice-President Valdis Dombovski said the reduction was insufficient and considerably wide of Italy’s EU obligations. EURUSD traded in a 1.1268-1.1300 range, unable to decisively break support in the 1.1270 area.
GBPUSD bounced off its overnight low of 1.2733 and is trading at the session high of 1.2794. The price action is all Brexit, and the chances of Theresa May’s Brexit deal getting passed by Parliament don’t look good, at least today. That can change at the drop of a hat.
USDJPY is bid on the back of the US dollar strength while the Trump/Jinping trade talks have kept the antipodean currencies rangebound.