The switch has been flipped.  Yesterday morning’s risk aversion sentiment has flipped to risk-seeking, albeit very modestly.  It started when NZDUSD rallied.  New Zealand inflation data was slightly better than expected.  Q4 CPI rose 0.1% (forecast) 0.0%, q/q making the year over year rate 1.9%.  That set the tone for the other commodity bloc currencies with the Australian and Canadian dollars moving higher.


The Bank of Japan helped. The BoJ left policy unchanged but downgraded the 2019/2020 forecast to 0.9% from 1.4% which some believed was a sign that future rate cuts may occur.  USDJPY rose to 109.78 from 109.33 on the news.


GBPUSD continued to climb, supported by reports that the British Parliament may pass an amendment that makes it illegal for a “no deal” Brexit. The Telegraph says the EU is ready to entirely “rework” the EU relationship with the UK. Also, the Labour Party reportedly would back a plan to delay Brexit. GBPUSD climbed to 1.3020 from 1.2994. 


EURUSD traded lower in a narrow range, continuing to be weighed down by EURGBP selling.  Traders are content to await the ECB policy decision tomorrow.

There are reports that the US Senate will deal with two competing bills to end the US government shutdown today, which has helped the risk tone, although, for the most part, the FX moves are just noise inside well-defined ranges.


USDCAD is tightly tracking US dollar moves against the majors but could see renewed demand after November Retail Sales data is released.  Retail Sales are expected to have dropped 0.6%, m/m, compared to October’s 0.3% gain.  WTI oil prices opened at the top of their $52.71-53.43/barrel range, helping to undermine USDCAD.

USDCAD continues to bounce around inside a 1.3250-1.3360 range which has to break to provide fresh short term direction.  Meanwhile the intraday USDCAD technicals are bullish while prices are above 1.3310, targeting 1.3360 and then 1.3420.  A break below 1.3310 would extend losses to 1.3250. For today, USDCAD support is at 1.3310 and 1.3250.  Resistance is at 1.3360 and 1.3420.  Today’s Range 1.3260-1.3360.