Overnight Range 1.3299-1.3455       

USDCAD was unable to crack resistance in the 1.3450 area and has reversed course, with a vengeance. The break below support at 1.3390 triggered stop losses with the move accelerating when 1.3350 gave way.  General US dollar weakness against the G10 currencies has fueled the move.

In Asia, USDJPY extended gains from New York, rising to 118.18 from 117.53, on the back of a rising Nikkei and supported by an increase in US 10-year treasury yields. However, those gains were not sustained.  USDJPY dipped to 117.35 by the time New York opened.

Aussie and Kiwi drifted higher in Asia and then accelerated in Europe following stronger than expected Eurozone data including CPI.

The Eurozone and UK data releases were on the strong side which undermined the US dollar. PMI data, in both areas, was stronger than expected and the jump in Eurozone CPI was viewed positively, at least for today.

EURUSD climbed from 1.0388 to 1.0445 before sliding to 1.0428 as New York opened. Sterling traded in a similar fashion, rising from 1.2222 to 1.2288 and then slipping to 1.2260.

WTI oil prices didn’t stray too far from yesterday’s $52.08 low, trading in a $52.29-$52.93 range. Prices remain pressured by a lack of evidence that production cut quotas are being adhered to.

A stronger than expected NFP report on Friday will raise concerns that the Fed may hike rates more often than previously expected.  That discussion will begin this afternoon with the release of the FOMC minutes from the December meeting. If those minutes imply a more hawkish Fed tone, the US dollar will rally.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish. The break of support at 1.3390 and 1.3340 has shifted the focus to support at 1.3280 which represents the 61.8% Fibonacci retracement level of the December 1.3080-1.3598 range.  A move below this level opens the door for additional weakness to 1.3170 level.  The 100-day moving average is at 1.3252 should provide a modicum of support.  For today, USDCAD support is at 1.3290 and 1.3250.  Resistance is 1.3350 and 1.3390.

Today’s Range 1.3290-1.3390

Chart: USDCAD 4 hour