Overnight Range 1.3270-1.3371 

USDCAD is inching higher following a nervous overnight session with a softer Canada Wholesale Sales report not helping.  (Wholesale Sales 0.2% vs. forecast 0.5%).  Overnight, USDCAD declined in concert with the broad US dollar weakness.  However, the Bank of Canada’s affirmation of a doveish policy and the fact that Canada is in the cross-hairs of any NAFTA renegotiation should limit USDCAD losses.

The week started with the greenback sliding, undermined by disappointment in President Donald Trump’s inaugural speech.

Protectionist trade fears were reinforced when Mr. Trump said “We assembled here today are issuing a new decree to be heard in every city, in every foreign capital, and in every hall of power. From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first, America first.”

FX traders (and others) expected that Mr. Trump would provide details on his promises of infrastructure spending, tax cuts, trade policies and more.  Instead they were treated to the equivalent of an “its us against the elites” rallying cry. The lack of spending details and fears about increased US protectionism gave way to long dollar position unwinding and a dash of risk aversion trading.

In Asia, USDJPY gapped lower.  opening at 114.25, after Friday’s close of 114.55. It bottomed out, mid-morning in Europe at 113.18.

AUDUSD and NZDUSD rallied erratically in Asia but retraced all the gains, opening in New York close to where they closed.

European traders bought EURUSD steadily but the rally stalled at the 1.0755 resistance area and prices have inched back.  There wasn’t any data of note leaving the “risk aversion” theme to drive markets.  Eurozone equity markets have underperformed.

Sterling added to Friday’s gains, in part due to general US dollar weakness and in part due to a continued “squeeze” of short GBPUSD positions.

Oil prices have slid from an opening level of $53.32 to a low of $52.31 undermined by Friday’s end of day report of another rise in US rig counts.

There isn’t any US data of note leaving White House announcements to provide direction.

Overnight Ranges

Open High Low

USDCAD

1.3284

 1.3331

1.3270

EURUSD

1.0737

 1.0753

1.0693

USDJPY

113.56

 114.41

113.18

GBPUSD

1.2462

 1.2470

1.2359

USDCHF

0.9984

 1.0026

0.9975

AUDUSD

 0.7558 0.7577

0.7551

NZDUSD

0.7185

 0.7216

0.7165

WTI

52.49

 53.44

52.44
Close 4:00 pm EDT-Open 6:00 am EDT

 

USDCAD Technical outlook:

The intraday technicals are bullish and looking for a retest of Friday’s peak of 1.3385. The failure to break below support at 1.3000 last week, combined with the break above resistance at 1.3180 and again at 1.3240 have shifted the focus back to a test of 1.3600.  Nevertheless, USDCAD is neutral within the confines of the 1.3000-1.3600 range.  for today, USDCAD support is at 1.3260 and 1.3190.  Resistance is at 1.3330 and 1.3380.

Today’s Range 1.3260-1.3360

Chart: USDCAD  30 minute