Overnight Range 1.3020-1.3188        

Sterling rebounded from yesterday’s sell-off buoyed by position squaring ahead of UK Prime Minister Theresa May’s Brexit speech and supported by higher than expected inflation data. That proved to be a wise decision.

PM May’s speech has just wrapped up and she left no doubt that the UK is going with a ‘hard Brexit. She said “So the country is coming together. Now we need to put an end to the division and the language associated with it – Leaver and Remainer and all the accompanying insults – and unite to make a success of Brexit and build a truly Global Britain.”

GBPUSD rallied from an overnight  low of 1.2018 to 1.2345 in a text-book example of  a “sell-the-rumour, buy the fact” move.

Elsewhere, US dollar slid across the board in an unsettled overnight FX market. Comments from Donald Trump suggesting that the dollar is “too strong: against the Chinese Yuan helped to undermine the greenback.

USDJPY got the ball rolling early, sliding from a peak of 114.29 to 112.72 in early New York trading. Safe haven demand due to renewed “hard Brexit” concerns fueled the move

Aussie and Kiwi traded sideways during the Asia session and rallied alongside the other majors during the European session

EURUSD recouped all of its losses since last Thursday supported by a drop in US Treasuries while ignoring a mixed German ZEW survey.

Oil prices have rallied with the US dollar’s decline. WTI has risen from an overnight low of $52.22 to a peak of $53.32.

The Canadian dollar went along for the ride. USDCAD dropped through support at 1.3090, touched 1.3015 and rebounded back to 1.3053. The Loonie is tracking broad US dollar moves and domestic influences are not a factor or Canadian data to provide a distraction. Uncertainty surrounding the new US administrations polices and the risk of “Twitter bombs” from Donald Trump will keep traders on their toes.  Friday’s inauguration will overshadow any comments from today’s Fed speakers, New York Fed President William Dudley and FOMC member Lael Brainard.

Overnight Ranges

USDCAD Technical outlook:

The intraday technicals are bearish.  USDCAD tested the downtrend line from the end of December overnight and rejected further upside.  The subsequent decline below 1.3090 and the early morning dip to 1.3020 will keep the focus on the downside.  Failure to decisively break below the 1.2990-1.3010 area argues for additional 1.3000-1.3250 consolidation.  For today, USDCAD support is at 1.3020, 1.2990 and 1.2960.  Resistance is at 1.3105 and 1.3160.

Today’s Range 1.3020-1.3120

Chart: USDCAD 1 hour