The Janet Yellen driven US dollar rally is proving to be durable.  Yesterday,  Ms Yellen said that the Fed needs to “be wary of moving too gradually.” Traders took that statement to mean US rates would be rising again, in December. The greenback finished Tuesday’s New York session with gains across the board.

The “dollar rally them continued overnight and was reinforced again, this morning with the release of strong economic data.  August Durable Goods Orders rose 1.7%, handily beating the forecast of  1.0% and well above July’s decline of 6.8%.

Overnight, EURUSD broke support at 1 1.1820, triggered stops and closed at 1.1792.  It traded sideways in Asia and the extended the losses in Europe.  It opened in New York at 1.1747, just below yesterday’s 1.1751 low, and traded at 1719 after the data.   EURUSD technicals are bearish.

Sterling followed EURUSD lower and for the same reasons  There is still a risk of a November rate hike but also plenty of time before then. Sterling has been whippy in a 1.3398-1.3425 range so far, today.

Janet Yellen’s speech and gains in US Treasury yields underpinned USDJPY overnight.  Prices climbed steadily from 112.23 to 112.83 by the New York open.  Those gains extended to 113.22 after Durable Goods.

AUDUSD was sold.  Some traders were surprised at the hawkish tone from the Fed’s Yellen.  AUDUSD fell from 0.7887 and has bounced between 0.7837 and 0.7860 since New York started trading

NZDUSD fared slightly better than the Aussie.  It traded in a narrow range and opened in New York where it closed.

WTI oil prices rallied from $51.84 to $52.30 after API reported a tiny drop in US crude inventories, for the week.  The gains were not sustained as the firm dollar led to profit-taking.

Gold prices continued to slide. XAUUSD dropped from $1,296.05 to $1,286.29 on the US interest rate outlook.

The Canadian dollar has been resilient.  USDCAD traded in a 1.2343-1.2410 range. Overnight and that didn’t change after the Durable Goods data.  US dollar support from the prospect of rising US rates is offset by expectations of higher Canadian rates and firm oil prices.

Bank of Canada Governor Stephen Poloz will explain “The Meaning of “Data Dependence”: An Economic Progress Report.” at noon.  There will also be a Q and A session.  Mr Poloz is well known for disrupting markets with his comments.

The US dollar may get an added boost when President Trump provides additional details for his much-ballyhooed tax reform plan, today.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while prices ar above 1.2230, looking for a break of resistance in the 1.2370 area to extend gains to 1.2440.  A break of this level will lead to 1.2540.  A move below 1.2230 opens the door to renewed 111.2140-1.2350 consolidation.  For today, USDCAD support is at 1.2310 and 1.2260.  Resistance is at 1.2370 and 1.2420.

Today’s Range 1.2320-1.23410

Chart: hourly