USDCAD Overnight Range   1.3040-1.3088                 

The Bank of England delivered a wee bit more than FX markets anticipated and left skeptical traders holding the bag. GBPUSD had risen from a low of 1.3172 on Wednesday to 1.3372 and then spent the overnight session consolidating within a 1.3280-1.3340 band

The  BoE cut rates by 25 bps (expected),  “a new Term Funding Scheme to reinforce the pass-through of the cut in Bank Rate; the purchase of up to £10 billion of UK corporate bonds; and an expansion of the asset purchase scheme for UK government bonds of £60 billion, taking the total stock of these asset purchases to £435 billion. The last three elements will be financed by the issuance of central bank reserves.”

GBPUSD tanked, falling to a low (so far) of 1.3114 from 1.3340.

Elsewhere, EURUSD popped after the BoE announcement but remains on the defensive ahead of tomorrow’s US employment data

Asia markets were fairly subdued overnight with traders mostly sidelined awaiting the Bank of England policy announcement. Only Aussie and Kiwi managed to squeeze out small gains against the US dollar. AUDUSD traders ignored weaker than expect Australia June Retail Sales (Actual 0.1% vs. forecast 0.4%) and bought Aussie anyway. USDJPY edged higher due to the lingering effects of Wednesday’s ADP employment report.

Oil prices were unable to sustain gains above $41.00/barrel and drifted down to $40.54.  There is increasing chatter that the much ballyhooed recovery in H2 that would raise oil demand and eat away at inventories may be delayed until Q4.

This mornings US Jobless claims data (Actual 269000 vs. forecast  265,000)  didn’t have any impact on trading

The Canadian dollar is at the mercy of general US dollar sentiment and oil prices.  It is getting a modest bit of benefit from sales of EURCAD and GBPCAD..  However, the short term bias is for a higher USDCAD as long as it trades above 1.3000.

USDCAD technical outlook.

The intraday USDCAD technicals are bearish while trading below 1.3080 and looking for a break of the minor uptrend line at 1.3040 to extend losses to the three week support area at 1.3000.  A decisive break below this level could lead to a re-test of 1.2830.  A break above 1.3085  leads back to 1.3150.  For today, USDCAD support is at 1.3040, 1.3000 and 1.2960.  Resistance is at 1.3085, 1.3120 and 1.3150.

Today’s Range 1.3040-1.3120

Chart: USDCAD 4 hour