Overnight Range 1.3426-1.3489   

The US dollar rally took a time out for turkey. The Asia market inherited a rising US dollar, buoyed by a rash of strong US data earlier in the day. The FOMC minutes failed to dispel the notion of a December rate hike and the yen and euro were at multi-month lows.

AUDUSD and NZDUSD moved lower initially but the moves were not sustained. The lack of additional downside combined with rising commodity prices contributed to both currencies recouping some losses during the European session.

In Japan, traders fresh from a mid-week holiday, looked at the FOMC minutes, strong US data, rising Treasury yields and bought USDJPY. The result was a test of 113.54, a level last seen in March. It has since drifted off that peak.

European traders were unimpressed with the lofty level of the dollar and decided to trim some positions. EURUSD was hovering in the 1.0520 area and climbed back to 1.0576 in early Toronto trading.

ECB Vice President Constancio reaffirmed that the ECB would maintain its expansionary policy and refused to speculate on the outcome of the Italian referendum.  He said “In the present constellation, our baseline scenario … is still the baseline scenario,” according to Reuters.

Sterling was in its own little world. GBPUSD traded sideways in Asia, drifted lower in early European trading and then rebounded to 1.2493 from a low of 1.2400.  Fiscal stimulus initiatives announced by the UK Chancellor of the Exchequer, yesterday and short covering provided support to the currency.

There was a lull in oil price volatility.  WTI traded within a very narrow 47.78-$48.13 band with traders’ content to await fresh developments from the Opec production cut negotiations. Russia is reportedly okay with a production cap but not a production reduction.

Global equity indices were slightly higher except for the Hang Seng and the FTSE 100.

USDCAD edged lower due to general US dollar weakness. A lack of domestic data, US rate hike expectations and concern about some of President-elect Trump’s policies are undermining the Canadian dollar.

The day is just starting but for Canadian FX markets, it is just about over. The lack of US markets greatly diminishes liquidity which encourages domestic accounts to stay on the sidelines.  There isn’t any Canadian data today or tomorrow.

USDCAD technical outlook

The intraday USDCAD technicals fare bearish following the move below 1.3510 suggesting further losses to 1.3440.  A break above 1.3510 will argue for additional 1.3450-1.3550 consolidation.  The longer term outlook is bullish while prices are above 1.3250 but waning momentum suggests a longer period of consolidation within a 1.3250-1.3600 zone.  For today, USDCAD support is at 1.3440 and 1.3410.  Resistance is at 1.3520 and 1.3560.

Today’s Range 1.3440-1.3520

Chart; USDCAD Daily