UK politics injected life into what would have been a dull,end-of-week overnight session. Prime Minister Theresa May’s Brexit deal led to a game of musical chairs with cabinet ministers and backbenchers voicing displeasure with the terms of the agreement under the guise of “protecting the British people” while trying to bolster their political fortunes. It seems that no one likes the deal, but no one has an alternative. Talk of PM May facing a “no-confidence” vote next week, should limit Sterling top side moves. GBPUSD traded in a 1.2762-1.2833 range.
The US dollar closed with a mixed tone on Thursday. It had small losses against the commodity currency bloc and the Euro and small gains against the Japanese yen and Sterling. The moves were reversed at today’s New York open. Yen and sterling are slightly higher, the Antipodeans and Swiss franc are lower, and the Euro are unchanged.
EURUSD has traded with a negative bias due to the ongoing Italy/EU budget impasse and pressure from GBPUSD weakness. A “no-deal” Brexit isn’t a good thing for the European Union either.
USDJPY has been weighed down by this week’s drop in US Treasury yields and the perception of a slower pace to US rate hikes.
Oil prices added to yesterday’s gains on hopes that Opec will announce production cuts at their December 6 meeting. However, this weeks news of additional increases in US crude inventories, suggests gains will be limited in the near term.
USDCAD retreated, in part due to position unwinding after the currency pair failed to extend losses above 1.3250. There isn’t any news of note. Traders will take direction from US Capacity Utilization and Industrial Production data for October.
The intraday USDCAD technicals are bearish while prices are below 1.3210. Yesterday’s break below 1.3220 snapped the uptrend line from November 7 and shifted the focus to support in the 1.3120-50 area. 1.3120 is also the base of the uptrend from September. A break below 1.3086 (31.2% Fibonacci retracement of October & November range) would target 1.2980. (61.8% Fibonacci retracement) For today, USDCAD support is at 1.3150 and 1.3120. Resistance is at 1.3210 and 1.3250.
Today’s range 1.3140-1.3210.