The US dollar added to its overnight losses when Retail Sales and CPI data were released.  CPI rose 0.1% in October, as expected.  Retail Sales beat the forecast (Actual 0.2% vs 0.0%) but not enough to shift the bearish dollar tone.

FX markets were not very bothered by the 14% rise in WTI oil prices since October 20.  However, they sat up and took notice when prices dropped 4.8% since last Wednesday. Oil price weakness is one excuse for today’s modest FX risk-off sentiment.

The oil price decline is due to a couple of factors including,  profit-taking, and fresh concerns that high prices would attract fresh US Shale production. Yesterday, the American Petroleum Institute reported a 6.5 million barrel increase in crude inventories.

A dearth of US data and a rash of European data yesterday, led to renewed EURUSD demand yesterday.  The break above resistance at 1.1750 triggered stop losses and hung a target on 1.1950.  There was a small gain in the  Eurozone Trade surplus.

Sterling rode a roller-coaster.  GBPUSD rose from 1.3130 to 1.3210 and then back to 1.3130 ahead of, and after UK data.  Wages ticked higher to 2.2% (forecast 2.1%, 3m, y/y) and the unemployment rate was unchanged at 4.3%.  Prices recovered somewhat and settled at 1.3164.

It was a lively Asia session.  USDJPY traders were not impressed with either the broad “risk-off tone” or the drop in US Treasury yields.  USDJPY ignored Q3 GDP data (Actual 0.3% vs forecast 0.3%, q/q, preliminary.  It dropped from 113.48 to 112.66.

AUDUSD got hammered on weak data and falling commodity prices.  AUDUSD dropped from 0.7631 to 0.7578 when Q3 Wage Price Index missed the forecast.  (Actual 0.5% vs forecast 0.7%, q/q)

The New Zealand dollar was unscathed.  Broad US dollar weakness lifted NZDUSD from0.6864 to 0.65909.

USDCAD direction was determined by US dollar moves vs the majors, with the drop in oil prices only playing a minor role.

Gold prices rallied, and global equity indices were in the red.  Zimbabwe’s army has taken control of the country.  Major General Moyo said the move was to protect the 93-year-old tyrant from “criminals” surrounding him.

USDCAD Technical outlook:

The intraday USDCAD technicals are unchanged from yesterday. Prices are bullish above 1.2710, looking for a break of resistance at 1.2770 to extend gains back to 1.2900.  A move below 1.2710 will lead to 1.2660. A decisive break of that level will lead to 1.2610.  For today, USDCAD support is at 1.2710 and 1.2650.  Resistance is at 1.2770 and 1.2810.

Today’s Range 1.2670-1.2770

Chart: USDCAD 1 hour