The US dollar added to Friday’s losses when it opened in New York today. The losses were much smaller than what was seen on Friday but evidence of a more optimistic outlook for markets. Fed Chair Jerome Powell acknowledged the December equity market volatility and said that there wasn’t a “preset path for policy” and that the Fed is listening to the market. That is “Fedspeak” for “oops, I may have been too hawkish.” That shift led to a 3.29% rise in the Dow Jones Industrial Average and knocked the US dollar lower against the G-10 majors, except against the Japanese yen. The positive sentiment continued in Asia where equity indices traded higher. European bourses are modestly lower.
EURUSD opened on a firm note supported by better than expected German and Eurozone data. Eurozone Retail Sales rose 0.6% in November. (forecast 0.1%) Nevertheless, EURUSD remains trapped in a 1.1300-1.1500 range.
GBPUSD will be extra-vulnerable to Brexit headlines. UK Prime Minister Theresa May is hoping to squeeze more concessions from the EU so that she can get her Brexit bill passed. The House of Commons will vote on the deal on January 15.
USDJPY has not recovered from the sell-off triggered by rising risk aversion and falling Treasury yields. Prices traded in a 108.03-108.76 range overnight. The downtrend is intact below 109.20
USDCAD dropped on Friday and consolidated those losses overnight. Friday’s stock market rally served to boost WTI oil prices which exacerbated the USDCAD sell-off. Traders are looking ahead to Wednesday’s Bank of Canada Monetary Policy Report, interest rate decision and Governors press conference which should limit further USDCAD losses to 1.3310.
The intraday USDCAD technicals are bearish while pricess are below 1.3420. There is plenty of support in the 1.3310-30 area which is also a pivot point. A break of 1.3328 (38.2% Fibonacci retracement level of October range targets 1.3000. A break above 1.3490 suggests another probe of the topside, looking for 1.3750. For today, USDCAD support is at 1.3330 and 1.3310. Resistance is at 1.3410 and 1.3440. Today’s Range 1.3320-80