It has been a wild and whacky 24 hours in equity and FX markets.  Yesterday’s Wall Street meltdown continued in Asia led by a 3.72% drop in the Nikkei 225.  Surprisingly, China’s Shanghai Shenzhen 300 Index finished the day with tiny gain which suggests some sort of official intervention.  European equity traders ignored the Asia market developments, and the major indices are higher, except for the FTSE 100 which is flat.  US equity futures point to a positive opening on Wall Street, perhaps in anticipation of strong earnings reports from the likes off Alphabet and Amazon.The US dollar opened with gains across the board except against the Japanese yen and Swiss franc, indicating a positive risk tone.


EURUSD is trading with a negative bias thanks to a weaker than expected German IFO survey. IFO Expectations, Current Assessment and Business Climate all missed forecast.  The single currency stayed inside a narrow 1.1393-1.1419 range with traders waiting for the ECB policy statement and press conference. Interest rates and policy guidance are expected to be unchanged.  ECB President Draghi’s press conference is the wild card.


GBPUSD traded sideways near the bottom of its recent range.  Theresa May is still Prime Minister of the UK, and ‘no-deal” Brexit issues continue to weigh on the currency.


USDJPY sank in Asia and then rallied in Europe, opening in New York at the top of its 111.83-112.34 range.   The rally coincided with a rise in 10-year US Treasury yields from 3.105% to 3.132%.


NZDUSD recovered quickly from losses after the New Zealand trade deficit widened in September.  AUDUSD rose and dropped in sync with the US dollar.


USDCAD is consolidating yesterdays sell-off in a 1.2970-1.3050 range.  The Bank of Canada’s policy statement and Monetary Policy Report were hawkish, fueling speculation of a faster pace of rate hikes.  Some analysts are suggesting another rate increase could occur at the December 6 meeting.  Recent strong economic data and the new USMCA trade proposal are behind the change in sentiment. Today’s US data includes September Durable Goods Orders (forecast -0.9% previous 4.5%) Initial Jobless Claims and Pending Home Sales.

The intraday USDCAD technicalS are bearish below 1.3040 looking for a retest of 1.2970.  If broken, it would target support at 1.2920 and 1.2880.  A break above 1.3040 targets 1.3090 and 1.3120.  Longer term, the uptrend line from February is intact while prices are above 1.2830.

Today’s Range 1.2970-1.3030