Overnight Range 1.3254-1.3283
This mornings Canadian and US trade data off-set each other as far a USDCAD traders were concerned.The narrowing in the Canadian data was cancelled out by a widening of the US deficit, which may provide additional fuel to Donald Trump’s anti-trade stance.
FX markets were a tad on the lethargic side overnight. The Italian Referendum drama is as faded as an eighty-year-old Miss Teen USA although concerns about the health of Italian banks have not gone away.
In Asia, it was Australia’s turn to shine. The Current Account deficit hit a two-year low. (-$11.4 billion vs. forecast -$13-7 billion). It really wasn’t as impressive as the headline suggests as it was due to a rise in the price of key commodities, not volume.
Later, the Reserve Bank of Australia (RBA) left interest rates unchanged (as expected). The RBA noted that the global economy was growing at a lower-than-average pace and made their usual complaint about an appreciating Australian dollar. AUDUSD retreated and opened in New York at 0.7445, just above the overnight low of 0.7432.
Kiwi drifted lower in sympathy with AUDUSD while USDJPY traded in a 113.45-114.20 range.
The story didn’t change in Europe. EURUSD traded sideways in a 1.0735-1.0785 range. Eurozone Q3 GDP was 1.7% vs forecast of 1.6%, yet the news didn’t create much of a stir.
GBPUSD ignored Brexit issues and inched higher throughout the session likely due to weak short GBPUSD positions still getting squeezed.
Oil prices inched higher but stayed well below yesterday’s peak. Traders appear unphased on the news that Opec production was a record 34.2 mb/d in November.
Based on the November survey, OPEC is pumping 1.69 million bpd above the 32.50 million bpd production target that it agreed last week.
USDCAD is benefitting from the general US dollar weakness and the firm oil prices and probing key support in the 1.3240-50 area. The currency may be getting an added nudge as weak long USDCAD positions get trimmed into year end
USDCAD technical outlook
The intraday USDCAD technicals are bearish while trading below 1.3290 targeting a break of major support in the 1.3240-50 area. A break below 1.3240 would extend losses to the 1.3180-90 zone, representing the September uptrend line and the 100-day moving average at 1.3189. A break above 1.3290 would target 1.3370. Only a break above 1.3370 would negate the short-term downtrend.
Today’s Range 1.3220-1.3320
Chart: USDCAD daily