Overnight Range 1.3286-1.3385        

Asia traders bought US dollars and European traders sold them in a topsy-turvy overnight FX session.

An evening speech by Janet Yellen at Stanford University was seen as mildly doveish by traders in Asia (in contrast to her remarks the day before) and they sold US dollars. Ms. Yellen said “I consider it prudent to adjust the stance of monetary policy gradually over time–a strategy that should improve the prospects that the economy will achieve sustainable growth with the labor market operating at full employment and inflation running at about 2 percent”

However, the bigger impetus to selling dollars was strong China data.  China Q4 GDP came in at 6.8% (forecast 6.7%), and December Retail Sales were 10.9% (forecast 10.7%, y/y)

EURUSD rose from 1.0650 to 1.0692.  AUDUSD and NZDUSD both rallied with Kiwi getting an extra nudge when S&P affirmed the country’s AA rating.

It was a different story in Europe. Traders, there were US dollar buyers.

EURUSD retraced all its Asia gains and then some, dropping to 1.0633 at the New York open, from a peak of 1.0692.  The reality is that the single currency is just sitting in the middle of this week’s range and unsure of which direction to take.

Sterling’s drift higher in Asia and early European trading ended with a weak UK Retail Sales report. December Retail Sales dropped 1.9% m/m. (forecast -0.1%).

Oil prices traded sideways in Asia and then spike from $51.51 to $52.05 on a mix of strong China data and optimism surrounding Opec compliance audits.

USDCAD retreated during the Asia session on the back of broad US dollar selling. That move was short-lived.  Demand for US dollars in Europe drove USDCAD from 1.3286 to 1.3375 at the New York open.  Weak Canada retail sales and inflation data didn’t help sentiment. December CPI decline 0.2%, m/m while November Retail Sales were 0.2%, well below the 0.5% that was forecast.

Financial markets will be watching the Trump inauguration ceremonies and possible riots which suggests FX trading will be subdued.

Overnight Ranges

Open

High

Low

USDCAD

1.3357

 1.3359

1.3286

EURUSD

1.0637

 1.0692

1.062

USDJPY

115.18

 115.28

114.54

GBPUSD

1.2286

 1.2370

1.2284

USDCHF

1.0082

 1.0086

1.0037

AUDUSD

0.7526

 0.7586

0.7519

NZDUSD

 0.7145 0.7222

0.7143

WTI

51.98

 52.06

51.39
Close 4:00 pm EDT-Open 6:00 am EDT

 

USDCAD Technical outlook:

The intraday technicals are bullish.  The break above 1.3180 and then 1.3240 reinforced the bottom at 1.3000. The uptrend following the break of resistance at 1.3180 remains intact while prices are above 1.3310 and looking for a break of 1.3390 to extend gains to 1.3450 A move above 1.3450 will test resistance at 1.3600.  A move below 1.3310 will lead back to 1.3250. Longer term, the 1.3000-1.03600 range has been intact since September and USDCAD is just above the mid-point of that band.  For today, USDCAD support is at 1.3330 and 1.3310.  Resistance is at 1.3390 and 1.3450.

Today’s Range 1.3330-1.3430

Chart: USDCAD 4 hour