FX traders were skittish, and trading was choppy overnight, but prices returned close to their Friday closing levels at this morning’s New York open.  Traders have a buffet of risks to worry about which include deteriorating US/China and now Canada/China trade issues, Tuesday’s UK Brexit vote, Thursday’s ECB decision, yield curve inversion, and more Wall Street weakness.


In Asia, AUDUSD and NZDUSD gapped lower at the open on rising US/China tensions, but prices quickly recovered as traders downgraded US interest rate hike fears.  USDJPY climbed from 112.25 in early Asia trading to 112.75 just before today’s open, supported, in part by an increase in US Treasury yields.  Japan Q3 GDP was weaker than expected (Actual -0.6% vs forecast -0.5%, q/q)


EURUSD traded choppily, rising from 1.1383-1.1441 in Asia, dropping back to 1.1404 and then rallying to 1.1420 just as New York opened.  Broad US dollar weakness as Fed rate hike forecasts are trimmed supported the moves as did pre-ECB positioning.


GBPUSD was bouncy ahead of the UK Parliament vote on Brexit tomorrow.  Most reports suggest that parliamentarians will vote against Theresa May’s plan.  As a result, a new referendum, and/or an election may be on the table. GBPUSD sellers emerged after a series of UK economic reports were weaker than forecast.


USDCAD is consolidating Friday’s Canadian and US employment report move. USDCAD dropped from 1.3396 to 1.3255 on Friday after Canada announced 94,000 new jobs in November.  The move was exacerbated by a weaker than expected US nonfarm payrolls report.  USDCAD bounced and closed at 1.3327.  Overnight price action tracked that of the antipodean currencies, however, the currency pair is underpinned as traders are concerned about the rising Canada/China tensions from the Huawei CFO arrest, low oil prices and a confused Bank of Canada.  The BoC can’t decide if it is hawkish or dovish.

Canada Housing Starts (forecast 196,000 s.a, November) and the US JOLTS report are released today but are not likely to impact FX trading.

The  USDCAD technicals are bullish in a 1.3180-1.3450 range, looking for a top-side break to extend gains to 1.3550.  However, the intraday picture is muddled.  A break above 1.3350 will lead to 1.3400 and then 1.3450 while a break of 1.3290 targets 1.3240 and then 1.3180.

Today’s Range 1.3280-1.3350