Overnight Range 1.3388-1.3495        

The US dollar rallied across the G10 currency spectrum with only the Australia dollar defying the move.

The verdict is in-at least for the next few days. President-elect, Donald Trump’s policies are good for the economy and likely to generate inflation. Buy US dollars.

The evidence is in global equity indices. All the major bourses are higher. Japan’s Nikkei 225 index rose 6.72%. In Europe, only the FTSE 100 declined and that is all to do with Brexit, not Trump

Yen trading started slowly in Asia but the combination of a rising stock market and the unwinding of pre-election “safe-haven” trades powered USDJPY higher rising to 106.90 from 104.95.

The New Zealand dollar had a very choppy session. The RBNZ cut the OCR rate to 1.75% from 2.0% on Wednesday afternoon, in New York trading. NZDUSD dropped and then rallied on the assumption that the RBNZ would be on hold.  General US dollar strength swamped that view and NZDUSD declined back to pre-OCR cut levels.

AUDUSD outperformed on better than expected data and improved outlook for commodities but that outperformance didn’t last in early New York trading.  AUDUSD gave up all its overnight gains.

In Europe, EURUSD trade sideways but with a negative bias and made a brief foray below 1.0900, undermined by divergent EU/US interest rate paths.  The European Commission president called for Donald Trump to provide clarity on trade and climate policies.  His comments were ignored by traders, and likely the Trump camp as well. EURUSD punched below the overnight low and hit 1.0870.

Oil traders were jumpy and WTI see-sawed within a $44.87-$45.61/b range.  Traders were torn between positive growth expectations from Trump policies and a fairly soft 2017 oil outlook by the International Energy Agency (IEA). The IEA said that Opec’s October production was a record 33.83 m/n per day and warned that “2017 could be another year of relentless global supply growth, similar to 2016”.

USDCAD was in demand to start the New York session, rising quickly from 1.3428 to 1.3495. session.  General US dollar strength and soft oil prices kept USDCAD is behind the mo

It is another light day for economic data releases.  The US has Jobless Claims and Canada answers with New Housing Price Index. Neither release will have an impact on FX trading.  Traders will take their cue from US equity indices.  Equity futures are pointing toward another “up” day.

The Canadian dollar outlook is negative. CAD/US interest rate differentials, soft oil prices and bullish technicals will keep the focus on 1.3550

USDCAD technical outlook

The intraday and short term USDCAD technicals are bullish.  The overnight break back above 1.3405 snapped the downtrend from the post-election peak of 1.3525 which sets the stage for another top-side probe. Only a move below 1.3380 would negate the upside bias.  For today, USDCAD support is at 1.3405 and 1.3380.  Resistance is at 1.3495 and 1.3530.

Today’s Range 1.3440-1.3530

Chart: USDCAD 30 minute