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The US dollar recovers some of its losses after good retail sales numbers

By OFX

The greenback obtains help this morning from retail sales numbers in October at 0.8% vs. 0.5% read (month to month). Later this morning, Federal Reserve Chairman Jerome Powell is due to speak about Hurricane Harvey recovery efforts at an event hosted by the Federal Reserve Bank of Dallas.

In yesterday session, October US CPI figures dominated economic releases. All major CPI measures came exactly in-line with expectations: 2.3% MoM, 0.2% Ex Food and Energy MoM, 2.5% YoY. The only major figure that came in lower than expected was CPI Ex Food and Energy YoY (2.1% vs. 2.2% surveyed).

The technical levels to consider for today for the US dollar index are 96.85 on the downside and 97.50 on the upside. The technical levels to think about today for the USD/CAD are 1.3212 on the downside and 1.3240 on the upside.

The Loonie is showing narrowed change this morning trading at the moment at 1.3227. Initially the Loonie was getting some stability, but once the US retails sales numbers came in and the existing home sales in Canada (month to month) in October showed -1.6 percent vs. -0.2 percent, the USD/CAD started to rise slightly (weaker Loonie).

The Loonie got hit momentarily in yesterday session reaching 1.3264 after politics in the United States interfered with Trump’s new trade deal with Canada and Mexico. Bill Pascrell, who is positioned to chair the Ways and Means Trade subcommittee, said there needs “to be not only changes in the legislation but more enforcement” if the Trump administration wants votes from Democrats. However, early in the morning, the Loonie was trading at a low of 1.3208 along with a bounce in crude.

The technical levels to consider today in the USD/CAD are 1.3175 on the downside and 1.3240 on the upside.

The EUR/USD is flat this morning trading at 1.1305. The ongoing Italian budget impasse is likely to provide a constant headwind for the shared currency for at least the next couple of weeks. Data-wise Q3 GDP came out as expected for the Eurozone as a whole, rising 0.2% for the quarter. The difference, however, was German growth figures which showed a faster than expected contraction of -0.2% for the July-September period. Global trade concerns are affecting the Eurozone engine room with its car sector suffering on the back of US President, Donald Trump’s trade offensive with China.

The EUR/GBP pair increased 2.05 percent, from 0.8678 the lowest level in yesterday session to 0.8856 this morning, due to the weakness in the Pound.

The technical levels to consider for today for the EUR/USD are 1.1262 on the downside and 1.1354 on the upside.

"The Brexit killing season" seems to have come to an end, and the Pound is getting hammered this morning against all its main pairs for over 1.5%. The failure to approve the Brexit deal in UK parliament will see very wild swings in the next hours or days.

Some of the most important headlines were the resignations of Brexit Secretary Dominic Raab, and Pensions Secretary Esther McVey. Also, the European Research Group of Tory MPs were to submit letters calling for a confidence vote in Theresa May's position. The EUR/GBP pair increased 2.05 percent, from 0.8678 the lowest level in yesterday session to 0.8856 this morning, due to the weakness in the Pound.

Regarding the GBP/USD, the technical levels to consider for today are still very wide because of further Brexit new events coming. The level on the downside is 1.2600, and the level on the upside is 1.3175.

The AUD raised above the 0.7200 cent handle overnight amidst strong jobs data; specifically, the employment change in October released last night. The actual monthly data came in at 32.8 k vs. 20 k read, and the unemployment rate in October was published at 5.0% vs. 5.1% read. The automatic reaction was to push the Aussie higher, with AUD/USD reaching 0.7298, a one-week high.

Broader direction and focus remains with ongoing the US and China trade relations. As delegates discussions develop, we continue to see Yuan volatility influencing AUD flows.

The technical levels to consider for today in the AUD/USD are 0.7250 on the downside and 0.7361 on the upside.

The Kiwi climbed overnight, along with the Aussie dollar but with less impetus. The AUD/NZD hit a 19-months low's, and it is bouncing after good employment news in Australia and inexistent news in New Zealand. However, later today we will have business manufacturing PMI numbers.

For now, all eyes will be on the ongoing United States and China trade talks as it continues to boost risk-based currencies such as the Kiwi. The expectation for the NZD is to potentially rise as long as investors remain optimistic over upcoming developments.

The NZD/USD pair opens this morning just above the 0.6800 figure.

The technical levels to consider for today for the NZD/USD are 0.6800 on the downside and 0.6860 on the upside.