The US dollar is modestly higher against the G-10 major currencies supported by soft Eurozone data.  The UK Brexit debate and US government shutdown concerns contained trading enthusiasm.


Weaker than expected Eurozone Manufacturing PMI (Actual 50.5 vs forecast 51.4) and German Manufacturing PMI data (Actual 49.9 vs forecast 51.3)  drove EURUSD from 1.1390 to 1.1340 where it opened in New York.   The data suggest that ECB President Draghi will echo his call for continuing monetary stimulus during today’s press conference after the ECB policy statement.


GBPUSD drifted higher in Asia, rising to 1.3090, before sliding to 1.3028 during the European session. The risk of a ‘no deal” Brexit is still high according to EU Chief Negotiator Michel Barnier.  He said: “There appears to be a majority in the Commons to oppose a no-deal but opposing a no-deal will not stop a no-deal from happening at the end of March. To stop ‘no deal’, a positive majority for another solution will need to emerge.”


USDJPY ticked higher, supported by yesterday’s somewhat dovish Bank of Japan outlook but the gains stalled as US Treasury yields eased down.


AUDUSD rallied then plunged in Asia. Prices rallied to 0.7165 on better than expected headline employment data.  However,  the details were somewhat soft as all the gains were part-time and the rally died.   Sellers emerged after NAB increased mortgage rates citing cost pressures.  Traders concluded that it could encourage the RBA to cut interest rates to ease funding pressures.  NZDUSD tracked AUDUSD lower.


WTI oil prices touched $52.14/barrel overnight after the American Petroleum Institute (API_ said US crude inventories rose 6.5 million barrels last week.  Prices recovered to $52.85/b and opened around the mid-point of the overnight range.


USDCAD was supported by the drop in oil prices in Asia and AUDUSD selling. Yesterday’s weaker than expected November Retail Sales data (Actual -0.9%, m/m vs forecast -0.6%) plus the downward revision to the October data also underpinned the currency pair. USDCAD direction will continue to be driven by US dollar moves, especially since there isn’t any domestic data on tap today or Friday.

USDCAD is in a uptrend channel between 1.3280 and 1.3380 which has prevailed for the past two weeks.  A decisive break above the top targets 1.3440 initially and then if it breaks it puts 1.3660 in play.  A move below 1.3280 would extend to 1.3220 and then 1.3160. Today’s Range 1.3310-1.3410.