USDCAD Overnight Range 1.2983-1.3053
US June Durable Goods surpassed expectations but May revisions were negative. The headline number of 3.4% handily beat the 3.0% forecast although a downward revision to the May data took the bloom off the rose. The US dollar reaction was understated and the focus has returned to Wednesday’s FOMC meeting.
Chinese equity markets melted down overnight and surprisingly, so did the US dollar. The Shanghai Composite Index plunged 8.5%, the largest 1 day decline since 2007. JPY and Swiss both gained which suggests a degree of risk aversion trading was at play but that argument has more leaks than a beer garden since the US dollar declined right across the board.
The combination of reduced market depth due to summer holidays and position adjustment ahead of the FOMC were the likely culprits behind the US dollar weakness.
The Canadian dollar was another story. Intraday traders were spooked with the USDCAD’s failure to close above the key 1.3065 level on Friday and pared back their positions, ignoring a soft WTI price. However, USDCAD losses were halted right above support and have since bounced above 1.3030, suggesting that the move was merely a correction.
The USDCAD intraday technicals are bullish following the bounce back above 1.3030 which now targets another visit to 1.3080. A move below 1.2970 would open up further losses toward 1.2910.
Meanwhile, the post BoC rate cut rally remains intact while USDCAD is above 1.2970, with the overnight drop merely a correction. For today, USDCAD support is at 1.3010, and 1.2970. Resistance is at 1.3050, 1.3080 and 1.3105
Today’s Range 1.3010-1.3080
Chart: USDCAD hourly with post BoC support shown