FX markets continued to trade with a risk aversion bias in overnight markets. Trump threat to “destroy North Korea” led to North Korea threatening a preemptive strike.

Dr Strangelove is no longer a figment of Stanley Kubrick’s imagination.The deranged general is real and is the President.

USDJPY chopped between 111.51-111.87, in Asia and Europe, trading with a negative bias on risk aversion.  Prices ticked higher in early New York trading.  The Bank of Japan minutes showed policymakers willing to stay with their current policy and optimistic because inflation measures have stopped falling.

NZDUSD suffered from a widening of the Trade Deficit and the uncertainty around the election outcome.  NZDUSD fell from 0.7276 to 0.7206 by the time New York opened.

Broad US dollar strength undermined AUDUSD which dropped from 0.7947 to 0.7897 in New York trading. Traders ignored firm commodity prices.

EURUSD broke key technical support in the 1.1820-30 area just before New York opened.  Prices dropped to 1.1786 due to concerns over the German election results.  French President Macron is speaking about his Eurozone plans today, which contributed to the EURUSD retreat.

Sterling is under pressure. GBPUSD traded sideways until New York opened.  Broad US dollar strength, profit taking and bearish technicals drove GBPUSD from 1.3512 to 1.3419.

WTI oil prices stayed firm but were off their best levels.  WTI traded in a $51.87-$52.40 range.

USDCAD  traded firmly in a narrow range due to general US dollar strength and profit-taking ahead of Fed Chair Yellen’s speech.  However, firm oil prices were a drag on US dollar gains.

It is shaping up to be a busy day.  EURUSD technicals turned bearish and suggest further losses ahead.   Fed Chair Yellen, Cleveland Fed President Mester and Fed member Brainard are talking, which should keep the focus on higher US rates and therefore a firmer greenback.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while prices ar above 1.2230, looking for a break of resistance in the 1.2370 area to extend gains to 1.2440.  A break of this level will lead to 1.2540.  A move below 1.2230 opens the door to renewed 111.2140-1.2350 consolidation.  For today, USDCAD support is at 1.2310 and 1.2260.  Resistance is at 1.2370 and 1.2420.

Today’s Range 1.2320-1.23410

Chart: Daily