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USD / CAD - Canadian dollar catches an up-draft.

- Fed Speak and second tier data ahead.

- Equity rally takes a time out.

- US dollar was fragmented vs the majors-CAD outperformed.

USDCAD: open 1.3636-40, overnight range 1.3622-1.3662, close 1.3595, close 1.3692, WTI $74.25, Gold, $2014.64

The Canadian dollar extended yesterday's gains in an uneventful overnight session. There hasn't been much in the way of market-moving economic data recently, other than the release of September Retail Sales. That data was considered stale as the Bank of Canada had already acted and left interest rates unchanged.

Traders have ignored BoC Governor Tiff Macklem's comment that interest rates are restrictive enough to bring inflation down to target. That may be because it is a similar view expressed by various Fed officials and even some in both the Bank of England and the European Central Bank. If everyone is doing the same thing, no one is advantaged or disadvantaged.

FX market direction is driven by the outlook for the US economy and by the FOMC's interest rate outlook. The US economy has greatly outperformed the developed market economies, which allowed it to better weather the interest rate hiking storm. Now that the Fed is likely finished raising interest rates, the risk of a recession has almost disappeared.

The US economic outperformance and the Fed's rate hike cycle fueled widespread US dollar demand. The recent US dollar weakness occurred in part because of the belief that other G-10 economies would rebound quickly, to catch up with the US economic performance.
That belief may have been misguided, and the US dollar weakness merely due to the unwinding of speculative long US dollar positions.

EURUSD was choppy, first falling and then recovering within a range of 1.0934 to 1.0963. German Gfk Consumer Confidence was -27.8, marginally better than both the forecast and the November result. No one cared.

GBPUSD firmed in a 1.2607 to 1.2642 range, receiving some support after Deputy Governor Dave Ramsden indicated that UK interest rates are likely to remain high for a prolonged period. In addition, pre-month end portfolio rebalancing flows may have helped to underpin prices.

USDJPY was choppy, first declining and then rising in a 147.99 and 148.84 band, with its movements reflecting shifts in the US 10-year Treasury yield which dropped to 4.396% from 4.496%.

AUDUSD inched higher in a 0.6598 and 0.6632 band. October's retail sales data was weaker than expected at -0.2% month-over-month compared to the forecast for a 0.1% increase.

US Consumer Confidence data is ahead.