USDCAD Overnight Range 1.2882-1.3009
The Canadian dollar rose this morning on the back of a stellar GDP report. Canada GDP in January rose 0.6%, the fourth consecutive monthly increase and well above the forecast for a 0.3% gain.
This mornings move is in sharp contrast to USDCAD’s performance in Asia where the US dollar firmed as traders consolidated the previous day’s losses. The lower USDCNY fix (6.4612 v. prior day of 6.4841) caused a bit of a stir and may have encouraged some US dollar buying.
Europe saw the dollar differently and sold it. There are rumours of sizeable US dollar selling requirements to satisfy month end portfolio rebalancing requirements which appear to have undermined the dollar. EURUSD is testing resistance at 1.1380-00 area as this is being written, a break of which, will lead to 1.1430.
The USDCAD losses came even as oil prices declined. WTI is down due to concerns that the over-supply situation has not been alleviated and because of bearish technicals on the break below $38.75. WTI has traded in a $37.80-$38.50 range since New York walked in.
The prospect of additional USDCAD selling around 8:00 am PDT due to “fixing” flows combined with today’s strong GDP report will keep USDCAD focused on a test of the 1.2820-40 area which is major support. It is not unreasonable to expect a rebound from this level.
.USDCAD technical outlook
The intraday USDCAD technicals are bearish while trading below 1.2990 which is guarding additional resistance in the 1.3020-30 area. Furthermore, the move below 1.2962 is a breach of the 61.8% Fibonacci level of the May 2015-January 2016 range and suggests a further drop to the 76.4% level which is 1.2563. However, a break of support in the 1.2820-40 needs to occur or a large correction could occur. For today, USDCAD support is at 1.2880, 1.2860 and 1.2835. resistance is at 1.2960, 1.2990 and 1.3030.
Chart: USDCAD daily