Overnight Range 1.3270-1.3374         

The Loonie was already on its back foot when New York trading started. The situation was aggravated by weaker than expected November Manufacturing Shipments (-0.8%, m/m) and a drop in oil prices. The divergent CAD/US interest rate policies and looming Trade issues supported the rally.

The fall-out from the FOMC meeting reverberated across Asia and Europe in a choppy overnight session. The damage was due to one more rate increase in 2017 than what was projected in September. The thought of three rate hikes instead of just two sent US dollar bulls into a feeding frenzy that could school a school of sharks.

The strength in the greenbacks rally was evident in the US dollar Index (USDX). It peaked at 103.25, this morning, a level last seen in 2003

EURUSD was at 1.0670 prior to the FOMC statement and fractured 1.0425 support in early New York trading. A decisive break of this level, representing monthly support since 2003, punches a ticket to ride to par (1.0000)

In Asia, Aussie attempted to outperform following a better than expected employment report. AUDUSD rallied from 0.7383 to 0.7430 before traders realized that, hey, the data is usually wonky. AUDUSD dropped and is currently sitting at 0.7375. Kiwi just traded lower.

USDJPY went on a tear. It was 115.00 ahead of the Fed and is currently sitting at 118.43.

The Swiss National Bank (SNB) left rates unchanged and stated the obvious by noting a “multitude” of political risks,

Sterling mirrored the EURUSD drop but remains a long way from the September low. GBPUSD did not see much benefit from a strong November Retail Sales report. The Bank of England is expected to leave rates and policy unchanged.

Oil traders kept to the sidelines and WTI drifted up from $50.83/b to $51.33/b. the move didn’t last and WTI has pushed below $50.00/b on general US dollar strength.

The Bank of Canada releases the semi-annual Financial System Review which is followed by a press conference by Governor Stephen Poloz. These remarks are unlikely to be a concern to FX traders unless Mr. Poloz talks BoC policy considering the yesterday’s FOMC announcement.

USDCAD Technical outlook:

The intraday USDCAD technicals have flipped to bullish. They are supported by the long-term uptrend line and 200 day moving average that contained downside moves. Yesterday’s rally above 1.3180 neatly filled the gap from Monday’s Asia open. The subsequent break through resistance at 1.3260 confirmed that a short-term bottom is in place.

The focus now shifts to the 1.3588 November peak. For today, USDCAD support is at 1.3305 and 1.3260. Resistance is at 1.3380 and 1.3430

Chart: USDCAD 1 hour