The US dollar opened in New York on a firm footing against the majors with only the Japanese yen posting a gain. The New Zealand dollar was unchanged. Traders are still eyeing global equity indices nervously. The Nikkei was up 3.34% at one point but those gains disappeared, and it closed nearly flat, gaining a mere 0.16%.  European equity indices have retreated off their intraday peaks, and US equity futures point to lower open.

EURUSD traded sideways in Asia and then rallied in early European trading, touching 1.2405 .German Industrial production data was close to the forecasts.  The big news was that Angela Merkel’s CDU/CSU party reached an agreement with the Social Democrat Party (SPD). The deal includes a new Finance Minister, which is viewed as being more supportive of struggling eurozone economies. EURUSD opened in New York at 1.2338, the overnight low.

Sterling peaked at 1.3991 in early European trading and then plunged to 1.3875 where it opened in New York.   Traders were unhappy with the 0.6%, m/m drop in UK house prices. GBPUSD has since bounced and is trading at 1.3905.

USDJPY drifted lower in Asia and Europe due to equity market and US Treasury yield concerns.

In Asia, NZDUSD spiked 0.7344 from 0.7306 after better than expected employment data. The move was reversed by the start of  New York started trading.

WTI oil prices were unable to hang on to gains made after the American Petroleum Institute’s weekly inventory report showed a small decline in supplies. Concerns about rising US production and the rising US dollar drove prices down from $64.15/b to $63.06/b, where it started today’s session.

USDCAD is tracking broad US dollar moves. Prices are supported in the 1.2460-80 area by on-going NAFTA cancellation concerns and expectations that US interest rates will rise faster than Canadian rates.

There isn’t any top tier data from the US but there are a couple of Fed speakers on tap. New York Fed President William Dudley and Chicago Fed President Charles Evans will be speaking around the lunch hour.

The only Canadian data release is Building Permits which shouldn’t be a factor.  Instead, the focus will continue to be on Wall Street.  Yesterday’s equity market rally didn’t even recoup 50% of the Friday-Monday losses. It is far to early to call an end to the equity market correction.

 USDCAD Technical outlook:

The intraday USDCAD technicals are bullish. While prices are above 1.2480 and looking for a break above the 1.2540-50 area to extend gains to 1.2660.   A move below 1.2480 would shift the focus to 1.2360.  For today, USDCAD support is at 1.2480 and 1.2430.  Resistance is at 1.2550 and 1.2580.

Today’s Range 1.2480-1.2580