USDCAD Overnight Range 1.3296-1.3354    

FX markets downgraded the European Central Bank president from “Super Mario” to “Second-rate Mario” following today’s ECB interest rate decision and press conference. Ever since the October 22nd meeting and Mr. Draghi’s assertion of an additional stimulus announcement in December, expectations have gradually escalated. They started out assuming the impact of a fire-cracker and rose to that of a “bazooka”. Today’s ECB announcement falls into the “fire-cracker” category.

The ECB announced a 10 basis point cut in the deposit facility, to minus 0.30 from minus 0.20. The market was expecting at least a 0.20 cut or more.  The market was also looking for an increase in asset purchases.  They didn’t get that, either. The EURUSD reaction was predictable and violent. EURUSD screamed higher and gained .0350 points in minutes.

The EURUSD reaction spread across the G10 currencies.  The US dollar lost ground against all of them with the exception of the Canadian dollar, which is flat. What makes the Loonie so special? Two things; Oil and EURCAD buying which off-sets USDCAD is selling.  WTI has been fairly stagnant but the Opec meeting tomorrow and its risk of a negative price surprise has kept Canadian dollar buyers on the sidelines.

Not surprisingly, the overnight action was fairly subdued although EURUSD was biased to the downside.  AUDUSD dipped slightly on weaker than expected trade data but the move was shallow and short lived

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.3350 but need to break below support in the 1.3270-90 zone to extend losses.  A break above 1.3360 shifts the focus to 1.3395-1.3405 resistance

There is no change to yesterday’s longer term outlook. The USDCAD uptrend remains intact with a break of 1.3460 extending gains to 1.3600.  A move below 1.3240 suggests additional 1.3050-1.3450 range trading.

Forecast Range for the day 1.3320-1.3405

Chart USDCAD 1 hour