Overnight Range 1.3505-1.3559                   

The US dollar drifted lower against the majors in a light volume overnight session which exacerbated the moves. The last week of December is notorious for having very poor liquidity and this year is no different.

In Asia, traders keyed in on a modest decline in bond yields and drove USDJPY from 117.15 to 116.22. That led to copy cat US dollar selling. AUDUSD rose from 0.7170 to 0.7220 and NZDUSD rallied from 0.6916 to 0.6970. Both currency pairs are trading just below their overnight highs.

EURUSD rebounded after touching 1.0370 yesterday in New York mostly due to profit-taking. The single currency rose from 1.0400 to 1.0480 and opened in New York at 1.0455.

Sterling tracked EURUSD higher with an assist from a bump in the Nationwide Housing Price index. GBPUSD move from 1.2208 to 1.2278 but has since declined and is currently sitting at 1.2244.

Part of today’s US dollar weakness is due to month end portfolio rebalancing flows. The steep gains in US equity indices in December suggest US dollar selling for month-end.

Oil prices have ignored the weekly API Crude Stocks Change data which showed a 4.2-million-barrel increase in US Crude inventories. WTI is trading at $54.00/barrel.

The Canadian dollar has dodged a bullet, at least for the time being. Yesterday, USDCAD was attempting to make a decisive break above resistance at 1.3590 but the rally stalled at 1.3599. Wide-spread US dollar selling overnight drove USDCAD back to 1.3500. That move died out in early New York trading and USDCAD is currently at 1.3535

Today’s US data releases (Jobless claims, Wholesale Inventories, Goods Trade Balance) will not be much of a trading factor and will be ignored.

USDCAD technical outlook

The intraday USDCAD technicals are modestly bearish while trading below 1.3570 looking for a break of 1.3490 to extend losses to 1.3430. A move above 1.3570 will target 1.3600 and then 1.3640.

Today’s Range 1.3510-1.3610

Chart:  1 hour