Overnight Range 1.3228-75
Sterling was in the spotlight in Asia and Europe. UK Prime Minister Theresa May, in a New Years address, indicated that Britain was heading for a “hard” Brexit. “Often people talk in terms as if somehow we are leaving the EU but we still want to kind of keep bits of membership of the EU. We are leaving.” UK Prime Minister Theresa May said, according to the Independent. GBPUSD got whacked, falling from 1.2280 to 1.2160 where it sat as New York started the day.
Aside from the Sterling drama, Asia markets were quieter than usual due to a holiday in Japan. (Coming of Age Day)
AUDUSD bounced within a 0.7287-0.7326 range supported by the failure to extend losses below minor support at 0.7280 and better than expected Building Permits data. Kiwi traded in a similar fashion within a narrow 0.6951-0.6976 band
In Europe, EURUSD rose, in part because of EURGBP demand and climbed to 1.0555 from 1.0515. That move didn’t last, despite better than expected German data and “as expected” Eurozone data. The German December Trade surplus improved modestly as did Industrial Production. Eurozone unemployment rate (9.7%) was unchanged.
Oil drifted sideways in Asia and then dropped from $53.74 to $53.02 in early New York trading. The Baker-Hughes US Oil Rig Count reported the 10th consecutive increase in rigs at the end of the day Friday. European traders jumped all over that data, concluding that US production was rising and sold crude.
USDCAD traded in a narrow 1.3228-66 band and tracked Aussie and Kiwi moves. The fall in oil prices provided additional support to the US dollar
The Bank of Canada Business Outlook Survey is released this morning but is likely to have limited impact. (as usual) The key driver for the loonie will continue to be the US interest rate outlook and Mr. Trump’s trade policies. His comments/threats to GM and Toyota could also be a shot across the bow for Canada’s auto sector.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish following this mornings break above the minor downtrend line at 1.3240 setting the stage for a test of resistance in the 1.3350-80 area. A move below 1.3230 would risk further losses to Friday’s 1.3175 low. For today USDCAD Support is at 1.3240 and 1.3210. Resistance is at 1.3290 and 1.3340.
Today’s Range 1.3240-1.3310
Chart: USDCAD 1 hour