Overnight Range 1.3402-1.3478
There’s a kind of a hush all over FX land. Well not really a hush, more like the calm before the storm. And that storm is named Opec.
The oil cartel has promised to deliver details of its production cap plan at their November 30 meeting.There is a disturbance in the force and you don’t have to be a Rogue Warrior or Jedi Knight to feel it.
Iran and Iraq are reluctant to participate in a production cap. Iran’s Oil Minister gave a hint of Iran’s position when he said “The revival of Iran ‘s lost share in the oil market is the national will and demand of Iranian people” according to Reuters. Overnight, WTI dropped from $46.94 to $45.86.
In Asia, AUDUSD gave back some of Monday’s gains, encouraged by softer copper and iron ore prices.
Kiwi recouped all of Monday’s losses, rising from 0.7050 to 0.7098 and remains at the high of the past week.
USDJPY rallied from 111.62 to 112.71 despite better than expected economic data. Traders appear more concerned with the prospect of widening JPY/US interest rate spreads then modestly better economic data releases.
There were a lot of data released in Europe including a bump higher in Eurozone Economic Confidence. (Nov. 106.5 vs. Oct. 106.4). EURUSD traders were unphased and the single currency traded in a 1.0566-1.0620 range.
Sterling has made a valiant attempt at recouping yesterday’s losses. GBPUSD rose from 1.2385 to 1.2488. Short covering and positive economic data fueled the move.
USDCAD got a bit of attention overnight thanks to a speech by Bank of Canada Governor Stephen Poloz. The only policy clue that he offered was that “the situation hasn’t changed much, as far as I can see” in response to a question.
At the press conference following the October statement, he said that Council had discussed cutting rates. Ergo, rate cuts may be discussed at the December 7 meeting. USDCAD drifted higher throughout the session and opened in New York at the top of the range.
This morning, US, Personal Consumption and Expenditures and Preliminary Q3 GDP data were released which came in very close to expectations. Consumer Confidence and the Case Shiller index will be released shortly. In addition, Fed members, Dudley and Powell will be speaking.
Normally, the data and speeches would elevate FX volatility. Not this time. Donald Trump’s victory and his infrastructure spending plans have changed the US economic landscape. Today’s data won’t change that. The Fed is going to hike rates in December so today’s speeches won’t have much impact.
Tomorrow is month end and quarter end. It is also Opec decision day. The combination of a production cut and the expected US dollar selling for portfolio rebalancing purposes will drive the US dollar down against the majors including USDCAD.
USDCAD technical outlook
The intraday and short term USDCAD technicals are bullish. Support in the 1.3390-1.3400 area was tested and it held. A topside break of minor resistance at 1.3480 will extend gains to the mid-November downtrend line at 1.3540. A break below 1.3390 would extend gains to 1.3320. For today, USDCAD support is at 1.3410, 1.3390 and 1.3360. Resistance is at 1.3480 and 1.3520
Today’s Range 1.3405-1.3480
Chart; USDCAD hourly