USDCAD opened with a modestly offered tone. Intraday traders were looking for a break of minor support at 1.2460 to extend losses to 1.2420 and maybe even lower. Unfortunately, the Canadian economic data didn’t help. Canada’s August Trade deficit widened to $-3.41 billion from July’s -$3.04 billion result. Forecasters had expected robust auto sales to narrow the gap. USDCAD spiked from 1.2468 to 1.2540 on the news.
The US data, Jobless Claims, and Trade was close to expectations and not a trading factor. There was a lot of talking going on, overnight but not a lot of FX action. Bank of England, European Central Bank and Swiss National Bank officials were chattering while a lot of Asia markets closed for holidays.
The day started with EURUSD, USDJPY and USDCAD opening virtually unchanged from yesterday’s closing levels
Australia got things going when Retail Sales missed forecasts (Actual -0.6% vs forecast 0.2%) AUDUSD dropped from 0.7863 to 0.7819. In reality, it just retraced part of Wednesday’s gains and the week-long 0.7785 0.7880 range is still intact.
NZDUSD was an afterthought and stayed in a tight 0.7148-65 range.
USDJPY was steady in a 112.56-90 range as traders held their fire ahead of Friday’s US employment report.
EURUSD was choppy in a tight range due to a lack of actionable, top-tier data. Spain/Catalonia developments are being carefully watched. ECB Governing Council member Ewald Nowotny suggested that the ECB quantitative easing program will likely start to taper rather than end in December. EURUSD dropped during New York trading, falling from 1.1775 to 1.1725.
GBPUSD broke support at 1.3220 and dropped to 1.3135 in New York trading. The pressure was due to the perception that Prime Minister May’s speech was ineffective and could spark a leadership review. Furthermore, some major banks were recommending long EURGBP positions.
USDCHF rallied from 0.9745 to 0.9772 when the Swiss National Bank Governor complained about the high level of the currency.
WTI oil prices have steadied above the $50.00/barrel level. Traders are weighing risks of increasing US oil exports disrupting Opec production cuts against falling US crude inventories. The King of Saudi Arabia is meeting with Russia’s Putin. Speculation is that they will discuss efforts to shore up prices.
USDCAD Technical outlook:
The longer-term USDCAD technicals are bullish. The uptrend line from September 15 remains intact while prices are above the 1.2450-60 area. A break above the 1.2530-50 area would target 1.2590 and then 1.2640. For today, USDCAD support is at 1.2480 and 1.2460. Resistance is at 1.2540 and 1.2580
Today’s Range 1.2480-1.2550
Chart: USDCAD daily