USDCAD Overnight Range 1.2462-1.2618          

That sizzling sound you heard, was the sound of the Reserve Bank of Australia tossing a “shrimp on the barbie” except these shrimps were actually AUDUSD bulls. The RBA, citing deflationary and domestic growth concerns surprised traders with a 25 bp. rate cut in the Official Cash Rate (OCR), to 1.75%.  AUDUSD plunged from 0.7719 to 0.7554. The currency pair rebounded in Europe but those gains were erased and AUDUSD started the New York day at the overnight low.

The bearish AUDUSD sentiment spilled over into USDJPY which slid into the mid 105’s although with Japan on holiday, volumes were low.

The “dump the dollar” theme continued in Europe. EURUSD rose to 1.1615 from 1.1513 which also managed to drag GBPUSD higher.

USDCAD has made a stunning reversal from its overnight low of 1.2462 and touched 1.2615.  The rally is due to profit taking, a shift into risk aversion trades and softer oil prices. There have been various media reports that the oil supply glut is getting worse including a story that Saudi oil production in April was near a record high. In addition, Reuters reports that inventory issues will force China’s “teapot” refineries to cut pack on imports even as Russia increases crude exports.

USDCAD remains hostage to overall US dollar sentiment and crude prices and will continue to trade erratically until Friday’s US employment report.

USDCAD technical outlook

The intraday USDCAD technicals are bullish following the overnight rebound above 1.2530 although gains above 1.2620 are required to extend the move toward 1.2690 and then 1.2750. A failure at the top will keep the focus on the 1.2460 level.  For today, USDCAD support is at 1.2560, 1.2530 and 1.2510.  Resistance is at 1.2620, 1.2660 and 1.2690

Today’s Range 1.2560-1.2640

Chart: USDCAD 30 minute

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