Rule Britannia is a patriotic Royal Navy song, originating when Great Britain ruled the oceans.  Today, Rule Britannia is how the UK Brexit negotiations have ruled FX markets, notably in the past 48 hours.

News that the EU and UK struck an accord on a draft Brexit agreement sent GBPUSD soaring from 1.2958 to 1.3033 in Asia trading.  Things quickly turned sour after reports of many ministers voiced displeasure at the terms.  GBPUSD started falling and accelerated lower in early New York trading touching 1.2887 as Prime Minister Theresa May briefs her cabinet. October GDP was unchanged.

The US dollar opened in New York with gains all around except against the New Zealand dollar.  The Canadian dollar opened unchanged from the close.


EURUSD suffered on the back of a weaker than expected German Q3 GDP report.  A slowdown in the auto sector hurt growth.  EURUSD drifted down throughout the overnight session.  Eurozone GDP was as expected, but employment was a bit weaker than expected, negating better than forecast Industrial Production data.


USDJPY traded choppily in a narrow 113.76-113.97 range.  Japan Q3 GDP missed forecasts.  (Actual -1.2% y/y vs forecast -1.0%)


Oil prices are still under pressure despite a report that Opec and partners are debating another 1.4 million barrel per day production cut.  Goldman Sachs analysts are blaming some of the oil price softness on a rash of puts struck at $50.0/b. When they expire, prices should rebound.


USDCAD is locked in a narrow band but trading with a bullish bias.  Major resistance in the 1.3250-90 area and the outlook for higher Bank of Canada rates are offsetting broad US dollar strength and low crude prices. A lack of domestic data means currency direction is at the mercy of broad US dollar moves.

Traders are looking ahead to this morning’s October CPI data (forecast 2.5% y/y vs 2.3% in September) to support further US dollar gains.

The USDCAD technicals are bullish.  The intraday uptrend following the break of resistance in the 1.3140-60 area is intact while prices are above 1.3220, and looking to challenge the 1.3250-90 resistance zone.  A topside break would lead to the 2018 peak of 1.3385.  A break below 1.3220 would target 1.3160.  Only a break of 1.3140 would negate the topside pressure.  For today, USDCAD support is at 1.3220 and 1.3180.  Resistance is at 1.3250 and 1.3290.

Today’s Range 1.3190-1.3280