The US dollar opened close to “unchanged” against the majors with the exception being the New Zealand dollar, which rallied.
Overseas markets were a tad concerned over the slow pace of the US tax reform bill. A couple of Republican Senators, perhaps grandstanding, wanted some changes to the proposed tax plan which is delaying progress.
NZDUSD led the majors, rising from 0.6981 to 0.7031 after the new Finance Minister told CNBC that “I am comfortable with the general trend.”
The Australian dollar and USDJPY traded sideways in Europe and Asia.
EURUSD ticked higher supported by comments from ECB board member Ewald Nowotny. He said forecasts were showing the “right developments” on inflation. The Eurozone trade data was ignored.
Sterling was uneventful. GBPUSD opened at the bottom of its 1.3411-1.3446 range as prices consolidate this week’s gains.
Oil prices continue to be underpinned by the North Sea pipeline outage. However, increased US production may cap gains and leave WTI to bounce inside a $56.00-$58.00 range.
One of the reasons that the Canadian dollar is not getting much benefit from the firm oil prices is the widening discount for Western Canada Select vs WTI.which as of December 13 was $18.33/b.
USDCAD came under pressure yesterday afternoon, when Bank of Canada Governor Stephen Poloz appeared to open the door to further rate hikes. He gave a speech about the three things keeping him awake at night. NAFTA wasn’t one of them. Ergo, if the BoC is not concerned about the trade negotiations, why should FX traders.
The USDCAD drop from 1.2850 to 1.2715 was probably more a factor of intraday positioning than a shift in rate hike sentiment.
Tax reform negotiations will govern US dollar trading. The greenback may get a bit of support if this morning’s Industrial Production and Capacity Utilization data is higher than expected. Canada releases October Manufacturing Shipments (forecast 0.8% vs. September 0.5%.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish while prices are below 1.2780, looking for a break of support in the 1.2690-1.2705 zone to extend losses to 1.2740. A break above 1.2780 suggests additional 1.27-1.2900 consolidation.
Today’s Range 1.2720-1.2820
