USDCAD Overnight Range 1.3042-1.3193      

The Canadian dollar is down and not just by a little bit. It is currently the worst performing G-7 currency today.  USDCAD started the New York session on the defensive as commodity currencies had a bit of a glow about them following yesterday’s ECB news. They looked even better when China’s PBoC cut interest rates. (The timing of the move was the surprise, the cuts not so much). But that all changed and barrage of bad news blew the bird out of the sky.

It started with the Canadian CPI release.  FX traders fixated on the headline number (Actual September CPI 1.0% vs. forecast 1.1% and August 1.3%) and immediately bought USDCAD. And then it got worse.  Commodity prices took a hit. WTI broke below minor support at $44.90/barrel and dropped to $44.10/b. when traders concluded that a strong US dollar and renewed China slowdown concerns were not a recipe for a surge in commodity demand or prices. USDCAD rallied nearly 1%, from a low of 1.3075 when New York traders walked in to 1.3195 by 9:50 EDT.

Overnight, traders were busy digesting the implications of Mario Draghi’s press conference. He essentially confirmed that the ECB would implement additional stimulus measures in December. Although the ECB was expected to be doveish, traders weren’t really short EURUSD, hence the 2.1% plunge.  There is talk of a ripple effect.  If the ECB is easing in December, it could cause the BoJ to ease next week and force the Fed to delay a rate hike. AUDUSD started off lower but quickly rebounded on the back of rising equity prices and a soaring Kiwi.  EURUSD was busy and tried lower but was rebuffed by the uptrend support line from April.  USDJPY had a moment.  A headline popped up stating that “no need for additional BoJ easing” and USDJPY dropped around 50 points.

This morning’s news and data has set the tone for the balance of the day and the US dollar will likely remain bid on dips.

USDCAD technical outlook

The intraday technicals are bullish.  The uptrend from the 1.2830 low remains intact above 1.3050 with today’s decisive break of resistance at 1.3150 hanging a target on 1.3450. Only a move below 1.3050 today, would negate the uptrend.  Resistance will be seen at 1.3220, the 61.8% Fibonacci retracement of the end of September/October range.  For today, USDCAD support is at 1.3140 and 1.3110.  Resistance is at 1.3205, 1.3230 and 1.3270

Today’s forecast range is 1.3040-1.3205

Chart USDCAD 4 hour