Overnight Range 1.3425-1.3503        

The US dollar has retreated modestly since New York opened, undermined by weaker than expected PPI data with a dose of profit-taking thrown in. USDCAD had rebounded from 1.3425-1.3503 on the decline in WTI prices and then retraced some of those gains following the Canada Manufacturing Shipments report that beat the forecast.  The headline (0.3% vs. forecast 0.1%) looks good but StatsCanada noted that in “constant dollar terms, sales edged down 0.2%, indicating lower volumes of good were sold in September.” That’s not so good.

Overnight, US dollar buyers were out in force again. The odds that the Fed raises interest rates at their December 14th meeting are at 90.6%, according to the CME’s FedWatch tool.

USDJPY climbed steadily, rising from 108.80 to 109.74 supported by general US dollar strength. The Nikkei 225 index closed with a gain of 1.1%

AUDUSD moved higher in the early going and then dropped following the release of weak economic data.The wage-price index rose just 0.4% in July-September, the smallest increase in nine years.

NZDUSD dropped on US rate hike expectations.

EURUSD shrugged off an upward bias in Asia when European traders started their day.  The drop from 1.0756 to 1.0693 was precipitated by the divergent economic outlook between the Eurozone and the US, rising EU/US interest rate differentials and the likelihood of a December rate increase by the Fed. St Louis Fed President appeared to confirm a December rate increase when he told reporters after a speech: “You’d have to have to have a surprise I think at this point” to stop a December rate increase.

Sterling squeezed higher in Asia and then retraced the entire move (and then some) in Europe. GBPUSD dropped from 1.2500 to 1.2408.  Mixed UK employment data and Mark Carney’s assertion yesterday, that weakness in the pound was necessary, contributed to the decline.

Oil prices shrugged off yesterday’s end of day API Crude stocks report.  API reported that US crude inventories rose 3.65 million barrels. WTI dropped to $45.40 from $46.05 in early Asia trading.  Prices rebounded back to $46.15 on news that the Saudi’s and Russia were working hard to strike a production cap deal. European traders didn’t buy into that argument and WTI dropped to $44.04 when New York walked in

USDCAD technical outlook

The intraday USDCAD technicals are bearish while prices are below 1.3510.  However, that level is under assault following the rebound from the 1.3420 low and subsequent break above 1.3440.  A decisive move above 1.3510 suggests a retest of this week’s 1.3588 peak.  For today, USDCAD support is at 1.3470, 1.3440 and 1.3420.  Resistance is at 1.3510, 1.3540 and 1.3590.

Today’s Range 1.34200-1.3510

Chart:  USDCAD  4 hour