Overnight Range 1.3491-1.3560      

The relentless US dollar rally following Donald Trump’s surprise victory and fuelled by rising bond yields took a breather in overnight trading. This morning’s October US Retail Sales data beat the forecasts (0.8% vs. forecast 0.6%) but was still below the September level.  The data’s importance has diminished due to the election results.

USDJPY dropped below intraday support at 108.25 in early Asia trading and declined to 107.80., which is still within the 5-month high range. It spent the rest of the overnight session bouncing between those levels.

AUDUSD ping-ponged within an 0.7535-80 range supported by the release of the RBA policy meeting minutes which reinforced the positive message from the November 1 statement.  NZDUSD followed AUDUSD higher but the effects of the weekend earthquake will likely keep the currency under pressure.

EURUSD snapped an intraday downtrend in early Asia trading and rallied back to 1.0815 when Europe opened. It has since drifted lower. EU Q3 GDP data was as forecast while the headline ZEW economic sentiment indicator rose to 15.8 vs. forecast 14.3.

Sterling got spanked. GBPUSD traded sideways in Asia and came under serious pressure in Europe, thanks to weaker than expected UK inflation data.  A BBC report that claimed the government did not have a Brexit plan didn’t help matters. GBPUSD fell from 1.2500 to a low of 1.2382 before inching higher.

Oil prices rebounded. Some pundits point to reports of a renewed effort by Opec to ensure the Algiers production cap deal details will be worked out. Others say it is merely an overdue short covering rally. Whatever the reason, WTI extended yesterday’s late day rally from $43.40 to $44.95/b in early New York trading.  WTI is flirting with resistance at $44.88 which if broken will extend gains to $45.72.

The US dollar retreat vs. the majors drove USDCAD below intraday support at 1.3560 to a low of 1.3492. The oil price rally helped to encourage the move.

USDCAD technical outlook

The USDCAD technicals are bearish following the overnight break of 1.3550 representing the base of the post-election uptrend line. And setting the stage for a test of 1.3420 on a break of the overnight low. (1.3491).  A break above 1.3560 will extend gains to 1.3590 with a focus on 1.3850.  For today, USDCAD support is at 1.3480 and 1.3420.  Resistance is at 1.3560 and 1.3590.

Today’s Range 1.3440-1.3540

Chart:  USDCAD 30 minute