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GBP/USD daily chart

• GBP/USD is trading in a bear trend below the 200-day simple moving average (SMA).
• GBP/USD is in a tight trading range for the 10th consecutive day at the November lows.

GBP/USD 4-hour chart

• GBP/USD is trading below its main SMAs.
• Technical indicators are slightly negative.

GBP/USD 30-minute chart

• As forecast GBP/USD dropped near 1.2720 level. 
• GBP/USD is set to stay supported for the remainder of the day with a potential bull target near 1.2800 figure.

Additional key levels

Data released today, showed that the Canadian economy expanded at an annualized 2% during the third quarter. According to National Bank of Canada analyst, Krishen Rangasamy, the surprise was the atypical weakness in domestic demand.

Key Quotes:

“Canada’s real GDP expanded at an annualized pace of 2% in Q3, as contributions from trade more than offset a small drag from domestic demand.”

“The Canadian economy decelerated in Q3 after unsustainable gains the prior quarter. The surprise, however, was the atypical weakness in domestic demand, particularly for business investment. Uncertainties related to the trade situation with the U.S. (recall the USMCA was only agreed on the last day of September) likely weighed on investment. While consumption grew in Q3, that came at the expense of the savings rate which plunged near all-time lows as Canadians dipped into their nest eggs to compensate for weak real disposable incomes.”

“Don’t expect a stellar Q4. True, solid corporate profits could help business investment bounce back, more so after the USMCA trade deal, while restocking could also assist growth. But a bad handoff from September ─ GDP fell 0.1% (unannualized) in that month ─ warrants caution.”

“While the Q3 GDP growth print came in slightly better than the Bank of Canada’s estimate of 1.8%, that’s unlikely to hasten the central bank into tightening monetary policy considering challenges ahead.”

• Energy slides in early trade amid a fresh crude oil sell-off.
• Defensive stocks stay strong.
• Leaders sign the USMCA agreement on Friday.

Major equity indexes in the United States were little changed at the opening bell as investors move to the sidelines before US President Donald Trump and Chinese President Xi Jinping meet on the sidelines at the G20 summit in Argentina. As of writing, The Dow Jones Industrial Average was losing 0.2% on the day while the S&P 500 and the Nasdaq Composite were virtually unchanged.

With the barrel of West Texas Intermediate falling below the critical $50 mark in the last hour, the S&P 500 Energy Index started the last day of the week under pressure and was last seen losing 1.3%.

On the other hand, the so-called defensive stocks seem to be finding demand ahead of this weekend’s events with the S&P 500 Real Estate and Utilities indexes gaining 0.55% and 0.37%, respectively. Meanwhile, market sentiment remains neutral in the session despite the fact that the U.S., Mexico, and Canada have signed the new USMCA agreement to replace NAFTA:

• The cross drops to lows following poor GDP figures.
• Canadian GDP contracted 0.1% MoM in September.
• On a yearly basis, GDP expanded 2.1% in Q3.

Renewed weakness surrounding the Canadian Dollar is now forcing EUR/CAD to drop to session lows near the 1.5100 handle.

EUR/CAD offered on data

The cross has accelerated the daily downside after canandian GDP figures noted the economy contracted at a monthly 0.1% during September vs. a 0.1% expansion forecasted.

Further data saw the economy expanding at an annualized 2.0% QoQ during the July-September period from 2.9% in the previous quarter.

In the meantime, the cross remains close to multi-day peaks against the backdrop of declining crude oil prices and uncertainty in the US-China trade front.

EUR/CAD levels to watch

As of writing the cross is losing 0.08% at 1.5120 and a surpass of 1.5149 (high Nov.21) would expose 1.5294 (200-day SMA) and finally 1.5327 (High Sep.27). On the other hand, the immediate support is located at 1.5079 (100-day SMA) followed by 1.5013 (21-day SMA) and then 1.4948 (low Nov.23).

   •  Canadian economy contract 0.1% m/m in Sept., yearly growth rate matches estimates.
   •  The post-FOMC minutes USD buying /fresh slide in oil prices remained supportive 

The USD/CAD pair held on to its daily gains and refreshed session tops, around the 1.3325 region post-Canadian GDP, albeit quickly retreated few pips thereafter.

Data released this Friday showed that Canadian economy unexpectedly contracted by 0.1% m/m in September and the yearly growth stood at 2.0% during the third quarter of 2018, indicating a notable slowdown from previous quarter’s 2.9% q/q growth. 

The negative headline readings, to some extent, was negated by stronger Canadian industrial product prices for Oct., though did little to prompt any meaningful selling amid the post-FOMC minutes buying interest around the US Dollar demand.

Meanwhile, a fresh wave of selling around oil markets, with WTI crude oil prices down nearly 1.5% for the day, seemed to dent demand for the commodity-linked Loonie and might now help the pair to regain some positive traction.

Technical levels to watch

A strong follow-through buying has the potential to lift the pair back towards multi-month tops, around the 1.3355-60 area, above which the momentum could further get extended towards yearly highs resistance near the 1.3385-90 region.

On the flip side, the 1.3275-70 region is likely to protect the immediate downside, which if broken might accelerate the fall further towards the 1.3225-20 horizontal zone en-route the 1.3200 handle and 1.3185 strong support.
 

• NOK regains some ground after testing lows near 9.7500 vs. EUR.
• The cross continues to navigate close to 2-month peaks near 9.77.
• Norway’s jobless rate rose to 2.3% in November.

The softer tone around the Norwegian Krone is sustaining the up move in EUR/NOK to the boundaries of the 9.7500 area, where met some resistance.

EUR/NOK offered post-data

The cross is extending the choppiness so far this week, although it remains within the multi-session consolidative theme near 2-month tops near 9.7700 the figure seen earlier in the month.

NOK gathered some traction despite the unemployment rate in the Nordic economy ticked higher to a non-seasonally-adjusted 2.3% in October, a tad above consensus. Earlier in the day, Norwegian Core Retail Sales unexpectedly contracted 0.2% in October from a month earlier.

The up tick in the jobless rate does not affect the solid health of the domestic labour market, let alone the prospects of further tightening by the Norges Bank, with the next rate hike expected at some point in Q1 2019.

EUR/NOK significant levels

As of writing the cross is up 0.18% at 9.7407 and a breakout of 9.7713 (high Nov.21) would aim for 9.7806 (high Aug.28) and finally 9.8079 (high Sep.7). On the flip side, immediate contention emerges at 9.6957 (low Nov.28) seconded by 9.6463 (21-day SMA) and then 9.5006 (low Nov.8).

The US President Donald Trump, during the USMCA signing ceremony, said that he is now looking forward to working with Congress to complete USCMS and don’t expect much of a problem ratifying new NAFTA.

Additional quotes:

   •  Trump: Currency manipulation from some countries ‘bad’.
   •  Trudeau: new agreement lifts economic uncertainty.
   •  Trudeau: There is much more work to do in lowering trade barriers.
   •  Trudeau: Metals tariffs are a major obstacle for our economy.

European Council President Donald Tusk, in a joint press conference with the EU chief Jean-Claude Juncker, at the G20 summit in Buenos Aires, Argentina, said:

   •  The choice will be no deal or no Brexit at all if the UK parliament rejects the Brexit offer.
   •  Becoming more clear that Brexit Deal is the best possible one. 
   •  Moves in the Sea of Azov are cause for concern. 
   •  Sure EU will roll over sanctions on Russia next month.