Italian League politician and economist Claudio Borghi opined about the benefits to Italy if the country left the Euro. His remarks carried a bit of weight as he chairs the budget committee of the lower house.  He later told Bloomberg that Italy has no plans to leave the Euro. In addition, Italy pushed back at pressure from the EU because of its 2.4% budget deficit.   Deputy Prime Minister Luigi Di Maio said: “We are not turning back from that 2.4 per cent target, that has to be clear.” The damage was already done.  EURUSD dropped from 1.1579 at yesterday’s close to an overnight low of 1.1506.  Eurozone PPI data was not a factor.

GBPUSD got smacked with a double whammy from weak data and a surging US dollar. UK Construction PMI dipped to 52.1 in September, a six month low, and down from 52,9 in August.  Brexit issues also weighed on the currency pair.  GBPUSD dropped from 1.3047-to 1.2959 where it opened in New York.

In Asia, China was closed again.  The USDJPY rally stalled at 114.00 on a bout of risk aversion selling and on the back of softer US Treasury yields.

AUDUSD plunged.  The RBA left rates unchanged, and the statement was modestly upbeat.  Interest rates are not going anywhere until 2020.  The surging US dollar and mild risk aversion because of Italy led to the AUDUSD selling.  NZDUSD tracked AUDUSD lower.

USDCAD continued to consolidate it’s post-trade agreement losses, trading in a 1.2801-1.2839 range.  Board US dollar strength was offset, to a degree by surging WTI oil prices and the prospect of a more hawkish Bank of Canada.  Oil prices are supported by expectations of supply shortages from the US sanctions on Iran.

The economic data calendar is light in the US and empty in Canada.  Traders will be looking ahead to Fed Chair Jerome Powell’s speech at around 1645 GMT today.

USDCAD Technical Outlook

The intraday USDCAD technicals are mildly bullish while prices are above 1.2790, looking for a “gap-filling” bounce to 1.2790-1.2808, which is where USDCAD was prior to the USMCA announcement.  A move below 1.2790 targets 1.2730 and 1.2650.  Resistance is at 1.2860 and 1.2890.

Todays Range 1.2790-1.2890