It wasn’t quite a “Silent Night” as Asia and European markets shrugged off the malaise that had enveloped them for the past few days. Equity indices in both areas rebounded, albeit not enough to recover their recent losses. Still, the bleeding was staunched, for now.
Sterling got a bit of traction late yesterday afternoon when the Financial Times reported: “UK and Brussels close to agreeing to Brexit deal.” GBPUSD jumped from 1.3200 to 1.3256 by mid-morning in London but then retreated to 1.3210 in early New York trading. Prime Minister Theresa May could find her deal a hard sell to a number of factions among her party and the Irish Democratic Unionist Party. (DUP)
EURUSD topped out at 1.1609 in Europe and slipped down to 1.1576. German CPI data was “as expected” while Eurozone Industrial Production data beat the estimates. The intraday EURUSD technicals are bullish above 1.1770, looking for a break of resistance at 1.1620 to test 1.1680.
USDJPY bounced inside a 112.01-112.48 range with traders tracking both the Nikkei and US Treasury yields. USDJPY has been in a downtrend since October 4 when it touched 114.54, and that downtrend comes into play today at 112.80.
AUDUSD and NZDUSD rallied on the back of the improved risk tone with Aussie getting additional support from the Q3 Financial Stability Report.
Today’s US data includes Michigan Consumer Sentiment (forecast 100.4, previous 100.1) and Export/Import prices. FX traders will take their cue from Wall Street. JPMorgan Chase kicks off earnings season, today.
USDCAD retreated from yesterday’s 1.3075 peak on profit-taking and broad US dollar weakness. The lack of oil price support from high WTI prices is evident in the discount for Canada’s Western Canada Select (WCS) which was a huge CAD$60.35 as of Tuesday.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.3020 looking for a break below support in the 1.2980-00 area to extend losses to 1.2930. Longer term, the uptrend line from February is intact while prices are above 1.2800. For Today, USDCAD support is at 1.2980 and 1.2930. Resistance is at 1.3020 and 1.3060.
Today’s Range 1.2960-1.3030