Overnight Range 1.3321-1.3364       

The frantic FX moves since Wednesday afternoon, were nowhere to be found overnight. It was quiet. The US dollar edged lower against EUR, GBP and CHF while remaining very close to unchanged against the commodity currency bloc and yen.

The US dollar had a good week.  It has risen against all the G10 currencies since Monday’s open led by USDJPY which gained 1.93%.

The FX market is still digesting the FOMC’s Summary of Economic Projections which points to three rate increases in 2017. Some analysts point out that there could even be more if Donald Trump’s economic policies prove to be inflationary.  Janet Yellen’s cautioned, during her press conference that “the changes in the dot plot were “slight” upgrades by only a few officials.

The European session did not generate any FX trading enthusiasm despite some heavy duty economic data releases. Eurozone November CPI came in as expected. (Actual -0.1%, Core—0.2%, m/m). News that the Trade Surplus narrowed was also ignored. Last week’s ECB policy actions are too fresh for anyone to care about this data.

Sterling bounced from the Asia low of 1.2383 to 1.2449 on profit taking.  Traders turned a deaf ear to reports that Japanese Banks are threatening to leave the “City” unless Theresa May’s government provides additional information on their Brexit plans.

Oil traded sideways in Asia, dropped in Europe and bounced in early New York trading. Goldman Sachs analysts bumped their 2017 WTI price forecast to $57.50 from $55.00.

USDCAD opened in Europe at it’s Asia low and has inched higher ever since.  Yesterday, the Bank of Canada released its semi-annual Financial System Review. Among other observations, Stephen Poloz noted that the Canadian economy had plenty of spare capacity, while the US economy had none. He also expressed an opinion on mortgage rates. “It’s absolutely a case that rising bond yields, which will translate into rises in mortgage rates here in Canada, represent a tightening of financial conditions here in Canada,” Source: Globe and Mail.

There is only US Housing and building permits data on tap today and FX traders won’t care. USDCAD traders will keep a watch on oil price movements but for the most part traders will be content to trim positions ahead of the weekend.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while trading above 1.3310 looking for a break above yesterday’s top at 1.3416 to extend gains to 1.3480 and then 1.3540.  The move above 1.3250 snapped a two-week downtrend and suggests that a short-term bottom is in place at 1.3080. If so, that sets the stage for additional 1.3250-1.3550 consolidation.  For today, USDCAD support is at 1.3310, 1.3280 and 1.3250.  Resistance is at 1.3380 and 1.3420

Today’s Range 1.3310-1.3410

Chart: USDCAD 4 hour