Morning Commentary & Currency Insights – November 29, 2018

FED Chairman Powell caught markets by surprise yesterday with comments that were perceived to be more dovish regarding rate policy. This turned all asset classes on a dime resulting in a risk rally pushing equities higher while the DXY & U.S 10 year rates both tumbled.  Overseas players have not pushed any of these markets far from yesterday’s close as the digestion process pans out with many getting a reality check on slower global growth while inflation remains firm.  Today at 2PM EST FOMC Meeting Minutes from last month will be released shedding further light on inner sanctum discussions of the FED.

USD/CAD touched 5 month highs yesterday but also sharply reversed on Powell’s comments shedding 0.75% within minutes of the headlines being released.  A less hawkish FED equals a less hawkish BOC and the CAD forward rate curve is still mispriced. Runaway CAD strength will likely prove elusive given how we are joined at the hip with our southerly neighbor and with oil still languishing are likely to see some consolidation within our 6 month range.  Trend line support now resides at  1.3218 and resistance comes in above at 1.3350-60. Tomorrow’s GDP in Canada should be decent but nothing spectacular as Canadian growth has rounded down considerably from the high water mark seen in the summer.