Did Italy blink?  EURUSD popped to 1.1592 from 1.1537 on reports that the Italian govern would bow to EU demands and cut their budget deficit plans. Prices receded down to 1.1557 in early New York trading when Deputy Prime Minister Luigi Di Maio denied such a move.  He told Bloomberg that the original 2.4% estimate stays, although the 2019 and 2020 deficits may be smaller than projected.  European bourses are mostly higher on the news. Today’s Eurozone data was a mixed bag.  August Retail Sales dropped 0.2% but the year over year number rose to 1.8% from a downward revised 1.0% in July.

The US dollar opened in New York with gains against the G-10 major currencies except for EUR and GBP.

Sterling has its issues, and they are Brexit and the Conservative Party convention.  GBPUSD rallied from 1.2973 to 1.3015 as risks of a leadership challenge to Theresa May faded.  That rally was reversed after UK September Services PMI missed forecasts.  (Actual 53.9 vs forecast 54.0)  Traders are sidelined ahead of Ms May’s speech later today.

USDJPY continues to consolidate gains in a 113.53-113.88 range, supported by the Jerome Powell’s hawkish-sounding speech yesterday.  He said, about inflation, the Fed would “Resolutely conduct policy consistent with the FOMC’s symmetric 2 per cent inflation objective, and stand ready to act with authority if expectations drift materially up or down.”

AUDUSD and NZDUSD were under pressure due to weaker than expected data.  NZDUSD dropped from 0.6592 to 0.6562 due to the weak GlobalDairyTrade Auction results released yesterday.  AUDUSD suffered from soft Building Permits data that drove prices to 0.7150 from 0.7195,

WTI oil prices ignored the 0.907 million barrel increase in crude inventories as reported by API.  Prices are supported by expectations for higher prices due to the US sanctions on Iran.

USDCAD has absorbed the good news of the new USMCA and that Shell Oil and partners have ok’d a $40 billion Liquid Natural Gas project that had been in the works since 2011.  Traders are looking ahead to Friday’s domestic and US employment reports.  There is little chance that an upside or negative NFP will alter the FOMC’s rate path.  Canada is different.  A better than expected result will start chatter of a more aggressive BoC policy while weak numbers will have the opposite effect.

US ADP employment data and ISM Non-Manufacturing data are due today.  There isn’t anything from Canada.

USDCAD Technical Outlook

There isn’t any change to the intraday USDCAD technical picture. USDCAD technicals are mildly bullish while prices are above 1.2790, looking for a “gap-filling” bounce to 1.2790-1.2808, which is where USDCAD was prior to the USMCA announcement.  A move below 1.2790 targets 1.2730 and 1.2650.  Resistance is at 1.2840 and 1.2890.

Todays Range 1.2810-1.2890