USDCAD Overnight Range 1.2875-1.2947    

The US dollar attempted to rally following this morning’s ever so modest improvement in CPI (Core Actual 0.2% vs. forecast of 0.1% gain) and a small drop in Jobless claims.  However the gains were short lived and the dollar sellers quickly returned.

Overnight, the story was the same except for the dollar rally part.

The Canadian dollar soared like Jose Bautista’s game winning seventh inning stretch, in another lively overseas FX market.

It started in Asia. The dollar continued to free-fall when Asian traders started their day, continuing the move at the end of the New York day. AUDUSD climbed despite weak employment data and renewed calls for a rate cut.  Kiwi stayed bid while USDJPY headed lower even as the Nikkei rallied.

In Europe, EURUSD retreated from its peak on doveish talk from an ECB official even though his comments were nothing new.

USDCAD direction is tied to US dollar direction against the majors and right now that direction is down. US dollar bears cite falling US Treasury yields, long dollar squeeze, soft US data and the perception of US rate hikes being pushed well into 2016 for the selling.

The USDCAD drop is beginning to look overdone, especially considering that WTI prices are currently testing minor support at $4575, which if broken suggests a steeper decline tow the $44.00/barrel area.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.2950 looking for a break of 1.2840 to extend losses to 1.2650. The move below 1.2900 broke both the 100 day moving average and the low following the July BoC rate cut. For today, USD Support is at 1.2875 (overnight low) 1.2840 and 1.2810.  Resistance is at 1.2950 and 1.2980

Today’s Range 1.2875-1.2950

Chart USDCAD 4 hour with downtrend