The US dollar strengthened against the G10 currencies overnight and then added to those gains in New York trading this morning.  USDCAD rallied when Canada building permit values dropped 5.8% in March far below the 5.0% gain that was expected.

Adding insult to injury, the rise in the US dollar put downward pressure on oil prices.  WTI is below the overnight low of $46.30, sitting at $46.17 as of 6:00 am PDT.  Oil traders are still debating whether the hoped for extension of Opec production cuts would be enough to offset the stubbornly high supply.  For what it’s worth, last month Opec was predicting that the oversupply issue would be corrected before the end of the year.

Overnight

USDCAD 1.3696 1.3682 1.3706 1.3672
EURUSD 1.0930 1.0904 1.0932 1.0893
USDJPY 113.19 113.72 113.82 11314
GBPUSD 1.2941 1.2928 1.2958 1.2916
USDCHF 0.9983 1.0015 1.0220 0.9979
AUDUSD 0.7388 0.7348 0.7396 0.7331
NZDUSD 0.6914 0.6896 0.6924 0.6881
USDMXN 19.1686 19.1822 19.2572 19.1547
WTI   49.36 46.28 46.75 46.30

VIX, the so called “fear-index” on the Commodity Board Options Exchange is at lows not seen since 2007 which added a layer of support to USDJPY.

The improved risk tone and the prospects for higher rates in June gave USDJPY a bid from the open in Asia. It rose from 113.14 to 113.68 and printed at 114.10 in New York trading.

AUDUSD is a little worse for wear following a weaker than expected March retail sales report (Actual -0.1% vs. forecast 0.3%). AUDUSD, which had drifted up to 0.7396 from 0.7380 prior to the data dropped to 0.7337.  It has bounced between that low and 0.7350 ever since.

Kiwi traded in similar fashion losing ground throughout the overnight session, in part due to fears that Thursday’s RBNZ policy statement will be somewhat doveish.

EURUSD flatlined in Asia and then dropped from 1.0925 to 1.0875 in New York. A lack of data and US June rate hike expectations are behind the moves. A Bloomberg article quoted UBS CEO and former Bundesbank Chairman Axel Weber predicted that the ECB may move towards tapering in September was ignored.

Sterling was whippy.  GBPUSD inched up from 1.2935 to 1.2952 when Europe opened. It sank, rallied, and sank again inside a 1.2914-58 range.  It keeps its upward bias in the medium term.

USDCAD Technical outlook:

The intraday USDCAD technicals snapped a downtrend from Friday with the move above 1.3710.  A break above 1.3750 will target 1.3850.  Only a move below 1.3670 will negate the upside pressure.  If broken support at 1.3640 and then 1.3610 would be in play. 1.3670 also is the uptrend line from the April 10 low and while it stays unbroken support the view for added gains to 1.3850.

Today’s Range 1.3650-1.3750

Chart:  USDCAD 4 hour

Source: Saxo Bank