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USD / CAD - Canadian dollar consolidating gains, again.

- Global markets in full holiday mode.

- October Retail Sales rise less than expected.

- US dollar mixed but lower from yesterday’s open.

USDCAD: open 1.3351-55, overnight range 1.3339-1.3972, close 1.3369, WTI $73.92, Gold, $2034.03.

The Canadian dollar rally was not convincing. Yesterday, USDCAD made an attempt to break the key 1.3300 support level, only to rebound from a low of 1.3313 to 1.3369 by day's end, mostly due to the 1.37% drop in the S&P 500 index.

This mornings release of October Retail Sales data didn’t do much for the Canadian dollar. October Retail Sales rose 0.7% m/m, better than in September, but below the forecast of 0.8%. Retail Sales, ex-autos rose 0.6% compared to 0.1% in September. The data is considered stale especially after the latest Bank of Canada monetary decision on December 6.

The Bank of Canada's Governing Council's meeting summary on December 6 leaned towards a restrictive stance. The Council expressed readiness to escalate its policy measures in response to rising wages and the notable term of 2023, "shelter-price inflation," especially following the unexpectedly high inflation numbers for November. However, any potential rate increases by the Bank of Canada hinge on the Federal Reserve's actions, which suggests that the interest rate differential between the Canadian and US dollar is likely to stay unchanged.

The Canadian economic situation is teetering on the brink of a recession, in stark contrast to the United States, where the Federal Reserve's policies seem to have facilitated a more controlled economic environment. This economic fragility is an added detriment to the Canadian dollar's value. Furthermore, aggressive energy policies by the Canadian government have deterred external investments, undercutting the positive impact that rising oil prices typically have on the Canadian dollar's strength.

EURUSD remained rangebound in a 1.0935-1.0987 range, and there were no actionable economic reports available. However, trading may get choppy around the 10:00 am ET option expiry window, as $5.1 billion of strikes between 1.0950 and 1.1100 expire.

GBPUSD traded in a 1.2612-1.2675 range, with price action mirroring that of EURUSD. The UK Guardian is reporting that British retailers are experiencing a drop in sales in December and have a gloomy outlook for the start of 2024.

USDJPY traded negatively in a 142.64-143.62 range. The currency remains on the defensive due to the outlook that the BoJ will start tightening in 2024 and because the US Treasury yield is at 3.88%.

AUDUSD is at the top of its 0.6725-0.6765 range, with prices supported by the rise in commodity prices and lingering positive sentiment from the risk of another RBA rate hike.