Canada GDP exploded through the 0.2% forecast and printed a stellar 6.0 % gain in May. The data put a derailed Loonie back on the tracks and took the sting out of yesterday’s price action.
USDCAD was flirting with resistance in the 1.2550-60 area when Canadian traders started trickling into their offices today. There hadn’t been any meaningful retracement in overnight markets following yesterday’s nasty “short squeeze” that took USDCAD from 1.2435 to 1.2565. Today’s data reversed that move, as USDCAD dropped from 1.2545 to 1.2441,
The Loonie got an added boost from disappointing US data. Analysts were suggesting that Thursday’s strong Durable Goods Orders would have driven US Q2 GDP above the 2.6% forecast. It didn’t. Q2 GDP was as predicted but well above Q1’s 1.2 %.
EURUSD popped from 1.1700 to 1.1750 on the news but quickly drifted back to 1.1720. USDJPY dropped to 110.85 from 111.20 and the bounced back to 111.10. AUDUSD and NZDUSD rallied but quickly pared the gains.
Overnight, FX markets were steadier following Thursday afternoon’s frantic price action. EURUSD drifted steadily higher, rising from 1.1672 to 1.1720, where it is now trading. German HICP inflation data was firmer than forecast. The Eurozone Economic Sentiment Indicator rose to 111.2, beating the 110.8 that was expected.
Sterling traded in a similar manner to EURUSD. GBPUSD spiked to 1.3116 after the US data but quickly reversed itself and dropped to 1.3082.
USDJPY dipsy-doodled in a 110.88-111.32 range and is trading at 111.06 in New York. Japanese employment and Retail Sales data did not have much impact.
AUDUSD started to slide in Europe and found a bottom at 0.7938 in New York, prior to the US data. It popped back to 0.7999 on the headline and settled at 0.74965.
WTI traded quietly in a $48.89-$49.13 overnight. Prices have inched higher to $49.22 and in New York.
USDCAD Technical outlook:
The intraday USDCAD technicals are neutral. A break of 1.2570 will target 1.2610, the downtrend line from the end of June. If 1.2610 holds, the rally will merely be a correction. This morning’s drop below 1.2510 suggests some consolidation is likely, within a 1.2415-1.2570 range. For today, USDCAD support is at 1.2460. and 1.2415. Resistance is at 1.2520 and 1.2770
Today’s Range 1.2420-1.2520
Chart: 1 hour