“Sleep with one eye open, Gripping your pillow tight, Exit: Light, Enter night, take my hand, we’re off to never, never land” Metallica 1991
FX markets are also operating with just one-eye open, and that eye is trained on the clock. Traders are counting down the hours until they can leave for Christmas holidays. Many have already done so. In fact, Toronto’s Pearson Airport says that Thursday, December 21 will be the busiest day of the holiday season with 130,000 passengers expected.
The US dollar opened with the Japanese yen, Swiss franc and New Zealand a tad weaker compared to yesterday’s close. The rest were almost unchanged.
USDJPY inched higher, rising from 112.85 to 113.17. Firm US Treasury yields and expected passage of US tax reform supported the currency.
NZDUSD was under pressure early thanks to weak GlobalDairyTrade auction results and a widening of the November Trade deficit. Most of those losses were recovered in European trading. AUDUSD rallied, in part due to AUDNZD demand.
The hoopla after the news that the US House voted to pass the tax reform bill became hoots from Democrats. A procedural issue meant the House has to re-vote on the tax reform bill today. It is still expected to be signed into law by President Trump, sometime today. The IMF said that Brexit was damaging the UK economy.
In Europe, Sterling churned in a 1.3379-1.3412 range. The BBC reported the Bank of England was proposing a plan for European Banks to continue operating under existing laws, regardless of Brexit.
EURUSD was choppy in a 1.1830-1.1857 range. many major Bank forecasts have EURUSD heading toward 1.2500-1.3000 in 2018. Weaker than expected German PPI data did not have any impact on trading.
Oil prices remained bid. Yesterday, API reported a 5.2 million barrel decline in US crude inventories and trades are hoping that today’s EIA Crude stocks report shows a similar result.
USDCAD drifted in a narrow band. Expected US dollar demand from tax reform combined with rising US interest rates is underpinning the currency pair.
Canada Wholesale Sales for October are due this morning (Forecast 0.5% vs September -1.2%) Traders will likely react to a weak number while ignoring a better than expected result. The bulk of the day will be devoted watching US tax reform progress, and a speech by President Trump after the act is passed.
USDCAD Technical outlook:
The short term USDCAD technicals are bullish while prices are above 1.2770, inside the well-defined 1.2640-1.2915 range. A decisive break above 1.3000 will be significant and could signal a new 1.3000-1.3500 range. For today, USDCAD support is at 1.2830 and 1.2770. Resistance is at 1.2915 and 1.2970.