USDCAD Overnight Range 1.2764-1.2808                      

Asia FX markets kicked off the week as skittish as a nag near a glue factory.  News of an ORB poll showing the Brexit “Leave” camp with a commanding 10 point lead late Friday was all the Asia FX traders needed to see.  They headed for the hills in a full blown “risk-aversion” move. GBPUSD got whacked again in Europe despite two new Brexit polls that showed the Brexit sides running neck and neck. That wasn’t enough to stem Sterling’s slide even though the polls appear to have contradicted the Friday poll.  They do show that the referendum result is still very much up in the air.  Risk aversion sentiment was evident in USDJPY which fell from 106.97 to 105.73.

The risk-aversion sentiment was on full display in global equity markets as well.  They are all down on the day.  DJIA futures are 17,707 at the moment, down .39%. China economic data releases were fairly benign and had little impact.

Sterling and its EU membership debate got most of the headlines, but Wednesday’s FOMC meeting helped to ramp up the fear quotient. The consensus is that rates will be left unchanged.  The nervousness stems from uncertainty about the tone of the statement and the new economic projections.  Hawkish? Doveish? Ambiguous?  All will be revealed after 2:00 pm on Wednesday.

Oil prices were also depressed and no psychiatrist’s couch could help. After peaking at $51.64 on Wednesday, the rising US dollar and global growth concerns have put downward pressure on WTI prices. Today, they gapped lower when Asia opened, falling to $48.19 from $48.99 at Friday’s close.

The slide in WTI combined with US dollar demand on risk aversion sentiment and bullish intraday technicals have propelled USDCAD through resistance at 1.2780 and opened the door to further gains to 1.2835. Canadian CPI data is released at the end of the week. Bank of Canada Governor, Stephen Poloz will be delivering a speech on Wednesday evening in the Yukon titled “The Canadian Economy : a progress report”.  It will be followed by a press conference. This speech may be completely overshadowed by the FOMC statement and economic projections.

USDCAD technical outlook

USDCAD is an uptrend from the May low which comes into play at 1.2690 while last weeks intraday June downtrend was broken with the breech of 1.2760-70 area, confirmed by the rally to 1.2808.  A break of resistance in the 1.2830-40 area would extend gains to 1.2910. A move below 1.2690 would negate the uptrend and put the May low back in play. For today, USDCAD support is at 1.2740 1.2710 and 1.2690.  resistance is at 1.2810 and 1.2840.

Today’s Range 1.2740-1.2810

Chart USDCAD 1 hour.