The US dollar started the New York week with a bit of a bid, ahead of today’s Durable Goods data.  The forecast was for an improvement over the April with traders expecting hoping) for an upside surprise.

They didn’t get it.  Instead May Durable Goods posted a 1.1% decline (forecast -0.6%) while the ex-transportation component came in at 0.1% vs. a forecast for a 0.5% gain.

EURUSD jumped from 1.1185 to 1.1213 on the news, GBPUSD climbed from 1.2730 to 1.2750 and USDJPY dropped from 111.70 to 111.39.  USDCAD barely budged

The impact of the data will be quickly forgotten as Durable Goods is notoriously volatile.  However, for today, the number is the only game in town.

Overnight, Asia markets were sleepy while European markets were livelier.

EURUSD languished in Asia but roared to life in Europe. Stronger than expected German IFO data (Expectations 106.8 vs. forecast 1064, Business climate-115.1 vs. forecast 114.4 and Current Assessment-124.1 vs forecast 123.3) lifted EURUSD from 1.1184 to 1.1206. Traders were still feeling good about the IFO data when news that Italy’s centre right parties made large gains in mayoral elections. EURUSD tumbled down to 1.1177 on the news. The durable Goods data unwound the move.

Sterling drifted higher in Asia on anticipation that Theresa May will announce a deal with DUP party to allow her to form a government.  GBPUSD peaked at 1.2757 and then dropped to 1.2707 on the Italian election story.

In Asia, several markets were closed for holidays.

USDJPY inched higher to start the day and then accelerated in Europe, rising from a low of 111.15 to 111.70. A rise in Asia equity indices an US Treasury yields encouraged the move.  The overnight gains were erased after this morning’s US data.

The antipodean currencies were subdued. AUDUSD traded in a tight 0.7562-0.7588 range while NZDUSD drifted inside a 0.9628-0.9662 range.  Aussie and Kiwi opened in New York virtually unchanged from Friday’s close.

USDCAD is rangebound. The June 12 Bank of Canada policy shift from doveishly neutral to hawkish, pegged the chance of a July rate hike at 33%. Friday’s soft inflation data didn’t do much harm to those odds.  That’s because the BoC should have already be aware of the inflation data.  If the BoC isn’t concerned, why should traders be?

The IMM Commitment of Traders report notes that although short CAD positions declined, the position is still large, which should help to cap topside gains.  On the other hand, soft oil prices will slow USDCAD losses.

USDCAD Technical outlook:

The technical picture hasn’t changed from Friday. The intraday USDCAD technicals are mildly bearish below 1.3290 inside the 1.3165-1.3350 consolidation range.  The downtrend line from May 5 remains intact while prices are under 1.3430.  For today, a break of 1.3210 will lead back to 1.3165.  If 1.3165 is broken, it will hang a target on 1.3010 and then 1.2965.  A break above 1.3320 would lead to a test of 1.3420.

Today’s Range 1.3190-1.3280

Chart: USDCAD  1 hour