USDCAD Overnight Range 1.2420-1.2565
The Loonie soared following the Bank of Canada slight shift to a more neutral stance supported by tweak of the language around inflation.It’s now “roughly balanced” rather than “more balanced” which in my opinion does not justify a 0.0125 point drop in USDCAD (From 1.2550 to 1.2425). That move was more a factor of intraday long USDCAD positions getting stopped out.The ongoing drift higher in WTI prices also contributed to the Loonies strength.
Overnight, the US dollar clawed back most of yesterday’s Retail Sales induced losses in a lively session. Economic data from China (GDP, IP and Retail Sales) came out on the soft side but didn’t have much of an effect on FX markets. European traders apparently decided that a minor miss in US Retail Sales didn’t warrant the reaction, especially when Greece’s EU membership is looking more fragile by the day. EURUSD has given back nearly all of yesterday’s gains.
USDCAD may extend losses below support at 1.2410 to test the 1.2340-60 area if Mr. Poloz sounds upbeat about the second-half recovery.
USDCAD technical outlook
Today’s drop in USDCAD from 1.2600 to 1.2470 is approaching the short term uptrend line from November in the 1.2430-50 area. A break below 1.2440 risks a retest of major support in the 1.2330-50 area. If that level breaks it is a straight drop to 1.2050. Only a bounce above 1.2510 negates the downward pressure.
Today’s Range 1.2360-1.2460