The mix of unflattering US nonfarm payrolls data on Friday and ok employment numbers for Canada combined to undermine USDCAD.  The currency pair dropped from 1.2594 to 1.2525. The bottom held on Monday, but it broke on Tuesday in Europe, on broad US dollar weakness.

FX markets had a slow start to the week.In addition to the Canada Thanksgiving holiday on Monday, markets were closed in Japan and the US.

In Asia, New Zealand gapped lower at Monday’s open after the final election count still didn’t provide a winner. The gap was filled relatively quickly, but NZDUSD has a negative bias.

AUDUSD slumped on weaker than expected Caixin Services PMI data (Actual 50.6 vs. previous 52.7) Those losses were fully recouped (and then some) in Tuesday trading thanks to improved business confidence data and broad US dollar weakness.

China fixed USDCNY at 6.6273, lower than expected

USDJPY was range bound in a 112.35-81 band.  The Japanese election campaign is in full swing.  Bank of Japan Governor Kuroda said that quantitative easing would continue.

In Europe, UK Prime Minister gave sterling a bid when she hinted at a cabinet shuffle.  GBPUSD extended those gains after a government “white paper” was released sketching the UK’s plans if no Brexit deal was released. Better than expected UK Manufacturing and Industrial Production data helped to fuel the gains. GBPUSD climbed from a low 1.3055 in early Asia trading on Monday to a peak of 1.3202 just before today’s New York open.

EURUSD was steady yesterday and drifted higher on Tuesday due to broad US dollar weakness. Catalonia leader Carles Puigdemont is expected to declare independence from Spain in a Speech around noon (EDT) today. The Spanish government will not be impressed.

WTI oil prices bounced around in a $49.10-$49.75/barrel range until mid-morning in Europe. News that Saudi Aramco would be cutting crude shipments and comments from OPEC Secretary-General that  there is evidence of oil market rebalancing boosted prices to $50.30/barrel.

Canada Housing data won’t have much impact on USDCAD trading, and there isn’t any actionable US data on tap.  Traders will look for inspiration from Wall Street while keeping an eye on President Trump’s Twitter account.

The President is having a war of words with the Republican chairman of the Senate Foreign Relations Committee, Iran, North Korea and the #FAKENEWS media.

All the above puts Trump’s tax plan on the back burner which has undermined the greenback.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish.  The downtrend from Friday’s 1.2594 peak is intact while prices are below 1.2540.  This morning break below support at 1.2520 snapped the uptrend that had been intact since mid-September, opening the door to further losses to 1.2410. A move below 1.2410 would target 1.2230.  For today, USDCAD support is at 1.2480 and 1.2440.  Resistance is at 1.2550 and 1.2590.

Today’s Range 1.2460-1.2540

Chart: USDCAD 4 hour