The Canadian dollar traded with a slight negative bias overnight. Yesterday, USD/CAD tested support in the $1.3100-05 area, which held. Prices subsequently drifted higher to revisit the resistance level of $1.3140, which is where they found themselves in early Toronto trading. The Canadian dollar may retest support again this morning if October Retail Sales data rises above the 0.5% forecast. The data is expected to be robust due to strong auto sales.
Today marks the last full week of trading for the European and North American FX markets, and trading activity is expected to be light as it was overnight. The U.S. dollar opened in Toronto on a mixed note. It recorded small losses against the Australian dollar and British pound, inching higher against the rest of the G-10 majors. The Swiss franc and Japanese yen opened unchanged.
USD/JPY drifted in a narrow 109.27-109.39 range even after a higher than expected inflation report. The National Consumer Price Index rose 0.5%, in November, well above the 0.2% that was forecast. However, the news was largely ignored following the unchanged Bank of Japan monetary policy meeting, earlier this week. USD/JPY is also supported by the rally in U.S. Treasury yields since last Friday.
The Australia and New Zealand dollars drifted aimlessly inside narrow bands with most desks already in holiday mode.
The British pound continued its trend of being the most active currency in overnight markets. GBP/USD bounced about in a $1.3009-1.3046 range. Better-than-expected U.K. GDP data lifted prices off the floor, but gains were capped ahead of the U.K. parliament vote on Prime Minister Boris Johnson’s Brexit plan. Q3 GDP rose 0.4% q/q compared to forecasts for a 0.3% rise, supported by a 0.5% y/y increase in Q3 Total Business Investment. Chancellor of the Exchequer Sajid Javid announced that he appointed Andrew Bailey to be the next Governor of the Bank of England. He replaces Mark Carney on March 16, 2020.
EUR/USD drifted lower overnight and broke minor intraday support at $1.1115 which suggests further losses to $1.1050. There were not any specific catalysts for the move, although the selling of EUR/GBP played a role.
Oil prices continue to consolidate recent gains. Prices have slipped from their overnight peak but are well above where they opened on Monday. West Texas Intermediate (WTI) continues to be underpinned by the production cuts by the Organization of the Petroleum Exporting Countries and the improved outlook for global growth following the U.S./China trade deal.
U.S. Michigan Consumer Sentiment Index and PCE-Price Index reports are ahead.
On behalf of Knightsbridge Foreign Exchange employees, have a wonderful holiday season.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
