USDCAD Overnight Range 1.2945-1.3080
USDCAD exploded higher on a worse than expected GDP print (May negative 0.2% vs forecast 0.00%), the 5th consecutive decline. However, the move was over in seconds. USDCAD retraced all its gains (and then some) when traders noted that the US Employment Cost Index, (a much more current indicator) was significantly lower than expected. EURUSD soared to above 1.1100 following the ECI report which is a buzz-kill for those expecting an FOMC rate hike in September.
Overnight, Kiwi was the story in Asia. It sank on news that the ANZ Business Confidence Index had fallen to a 6 year low (-15.3). USDJPY rallied on a Reuters report that the BoJ’s Kuroda said he never intended to stop the yen from weakening. EURUSD bounced off its lows and drifted higher into the start of the New York Day.
USDCAD is volatile. After touching 1.3080 on the GDP headline, widespread selling of US dollars on the ECI report, a jump in WTI oil to $48.41 and rumours of USDCAD selling for the month end fix (8:00am PST) have driven USDCAD to a low of 1.2945 (so far).
It is unlikely that USDCAD has a lot of downside below 1.2860 due to the ugly domestic data and the prospect of depressed WTI prices from OPEC over production. There are also reports that the Prime Minister will dissolve parliament this weekend kicking off a 2 ½ month long election campaign.
Technical Outlook
The intraday technicals are a mess. This morning’s spike to 1.3080 and then drop to 1.2945 have pretty much turned them to mush. However, the uptrend from the June 15th low remains intact while trading above 1.2920. This morning’s move below 1.3005 should keep 1.2920 in focus.
Longer term, USDCAD appears trapped within a 1.2900-1.3100 trading band. For today, USDCAD support is at 1.2940 and 1.2900. Resistance is at 1.3000, 1.3050 and 1.3080
Today’s Range 1.2910-1.3010
Chart: USDCAD 4 hour
