USDCAD Overnight Range 1.3133-1.3186
USDCAD opened in Toronto near the top of its Monday-Tuesday range, supported by the prospect of higher US rates, sooner, a minor dip in oil prices and general US dollar strength vs. the majors. It has since drifted lower with the modest rise in oil prices and a lack of fresh trading incentives.
Yesterday, while Canadian’s celebrated the start of the summer season, USDCAD traded choppily, in light volumes but with a bullish bias. That was the story for the majors, as well. USDJPY was offered due to reports that the US administration expressed annoyance at Japan for their currency practices at the weekend G7 meeting in Japan. Weak Eurozone PMI’s undermined EURUSD.
US dollar demand continued in Asia overnight with USDJPY the key focus, once again. This time, comments by the Japanese Finance Minister, Taro Aso, reportedly drew a line in the sand for FX intervention at a 5 yen move over two days. That size of a move in USDJPY is relatively rare. The Reserve Bank of Australia governor, Glenn Steven’s said that the RBA was committed to the inflation target of 2.0-3.0% and that the AUDUSD adjustment was appropriate.
FX markets were lively in Europe. Soft data, particularly a weaker-than expected ZEW economic sentiment indicator for the Eurozone (Actual 16.8 vs forecast 23.4) contributed to EURUSD selling. The single currency dropped from 1.1225 to 1.1167. The Bank of England governor, Mark Carney defended his comments on Brexit but what got GBPUSD rallying was another Brexit poll showing the Stay side with a 13 point lead. USDJPY was also in demand and managed to recoup all of its Asia losses.
USDCAD will stay firm on US rate hike concerns with Friday’s Janet Yellen speech being eagerly awaited. There isn’t any Canadian economic data due today. The US releases New Home Sales data.
USDCAD technical outlook
The USDCAD technicals are bullish while trading above 1.3050, supported by the break above 1.3010 earlier and targeting a test of 1.3220 and then 1.3300. Intraday, a move below 1.3130 would extend losses to 1.3070 and then 1.3040. A break of 1.3070 would extend losses to 1.2970. For today, USDCAD support is at 1.3130 and 1.3090. Resistance is at 1.3180 and 1.3220
Today’s Range: 1.3130-1.3220
Chart: USDCAD weekly