USDCAD Overnight Range 1.2400-1.2470    

USDCAD was drifting higher from the opening and then got a bit of a boost from the CHMC Housing Starts data which showed a 201,705 gain in May. CMHC also includes a trend measure, a six month moving average that is supposed to smooth out the wild fluctuations in the monthly data.  That average was 181.231 vs Apr. average of 179.524.

The real story is if the impressive nonfarm payrolls report will be followed by a just as impressive Retail Sales report on Thursday. If so, the rate hike hounds will be unleashed with September the likely date. At the same time, improving data in the Eurozone (German IP was better than expected) and firm German bund yields have taken some of the sting out of the Greece default risk.

The on-going G-7 meeting in Germany continues to pose headline risk as evidenced by today’s European morning action. A French official reported to Bloomberg that “Obama said strong dollar is a problem” EURUSD jumped and only retreated after the Whitehouse “clarified” the statement.

The current USDCAD range of 1.2360-1.2560 should remain intact, at least until Thursday.

USDCAD technical outlook

The intraday USDCAD technicals are modestly bullish while trading above the 1.2400-10 area representing trend line support and the 100 day moving average. A move above resistance at 1.2460 should extend gains to 1.2530.  A break below 1.2390 will see a retest of 1.2360.

Today’s Range 1.2390-1.2460

Chart: USDCAD 4 hour with expected trading range for the week