USDCAD Overnight Range 1.2764-1.2811                   

FX markets have taken a step back from the European session’s “risk-on” rally due in part to profit taking led by a retreat in GBPUSD from the overnight peak of 1.4783. That move helped USDCAD rebound from 1.2664 to 1.2695 in early New York trading.

GBPUSD flat-lined in Asia and then powered higher in Europe setting off another round of “risk-on” trading. An ORB Poll on Brexit, for the Telegraph, gave “Remain” the lead at 53% with “Leave” at 46%.  That appears to be the poll that the markets have focused on while ignoring a YouGov online poll for the Times that gave “Leave” a 2-point lead-44-42. George Soros, multi-billionaire FX speculator, famous for blowing Sterling out of the European Exchange Rate Mechanism (ERM) in 1992 (while pocketing $ 1 billion profit for himself) penned an essay in the Guardian, that warned if Britain was to leave the EU, it would trigger a massive fall in GBPUSD, worse than in 19992 with none of the benefits to the economy. His article may have helped the GBPUSD demand.

In Asia, AUDUSD traders had an eye on the Reserve Bank of Australia minutes, hoping for some insight on the direction of domestic interest rates.  They didn’t get any.  The minutes presented a fairly upbeat assessment for the economic outlook while be cautious about international developments. Still, markets are pricing a 52% possibility for an August rate cut. AUDUSD shrugged off that thought and rose steadily until the New York open.  The risk on sentiment lifted USDJPY which is starting the New York session at its overnight high.  European ZEW Survey data was better than forecast but had no impact on trading.

The Loonie has joined the risk-on party and while it still has all its clothes on, it is dancing on the table tops. USDCAD has been on a one-way move lower since breaking the June uptrend line at 1.2950.  This move has occurred in the absence of key domestic economic data while being aided and abetted by a bounce in WTI prices.

Janet Yellen’s semi-annual testimony to Congress is this afternoon but her remarks are not expected to be any different from her press conference last week.

USDCAD trading will be driven by risk sentiment and oil prices.  The approach of the Brexit vote may lead to subdued volumes and narrow ranges

USDCAD technical outlook

The intraday USDCAD technicals are bearish and in a downtrend channel bound by 1.2790 on the top and 1.2710 at the bottom. The uptrend from the May low of 1.2462 remains intact while prices are above 1.2710.  A break of this level will extend losses to 1.2650 and then 1.2560. USDCAD needs to reclaim territory above 1.2850 to negate the short term downward pressure.

For today, USDCAD support is at 1.2740, 1.2710 and 1.2680.  Resistance is at 1.2790, 1.2820 and 1.2850

Today’s Range 1.2740-1.2830