Overnight Range 1.3240-1.3305
The weekly US Jobless Claims data beat the forecasts and came in at 246,000, the same as the previous week. The US dollar gained modestly as the report provides further support to those expecting the Fed to raise rates in December.
The Canadian dollar ended yesterday on a sour note. A much bigger-than-expected 2.7 million barrel rise in crude oil inventories as reported by the American Petroleum Institute (API) at the end of day, drove USDCAD higher in Asia. The news got worse. China posted weak Trade data. Exports dropped 10.0% (forecast -3.0%) while imports declined 1.5% (forecast +1.0%). Today’s release of the Canadian New Home price index (Actual 0.2% vs previous 0.4%) didn’t have any impact on USDCAD trading.
The antipodean currencies were in risk off mode in Asia. AUDUSD declined from 0.7540 to 0.7504 and NZDUSD dropped to 0.7033 from 0.7064. USDJPY erased all of Wednesday’s gains, declining from a peak of 104.62 to a low of 103.56
The US dollar rally, so evident in Asia faded faster than Donald Trump’s presidential hopes in Europe. Oil prices bottomed out, EURUSD climbed back to 1.1055. It has since slipped down to 1.1022 in New York trading.
EURUSD received additional support from speculation that any quantitative easing tweaking announcements wouldn’t occur until December at the earliest.
Even Sterling’s downhill slide took a breather helped in part by the UK government’s decision to allow the British parliament to debate the Brexit plan.
The poor China trade report spooked equity traders. Global equity indices are down across the board on concern that growth in China’s economy is still slowing. Renewed US rate hike concerns added to the bearish sentiment.
The US dollar opened slightly weaker compared to Wednesday’s close against the G10 currencies except for the Australian dollar and the British pound. None of the moves are spectacular and they don’t do anything to change the recent trends.
FX markets are resigned to a US rate hike in December, at least 64% of them. Only the pace of future increases is concerning. To that end, traders will be looking for additional support for a rate increase from today’s US Jobless claims and Import/Export data. The Energy Information Administration (EIA) Crude Stocks report could send USDCAD back to 1.3305 if it validates Wednesday’s API data.
The noise of sabers rattling may further unsettle global markets. The US military launched cruise missile strikes into Yemen, adding another Middle East country to their shooting gallery.
USDCAD technical outlook.
The intraday USDCAD technicals are bullish while trading above 1.3190 (200 day moving average) and 1.3240 looking for a retest of the overnight peak of 1.3305 and then 1.3315 (38.2% Fibonacci retracement of 2016 range). A break of 1.3315 would likely trigger stop loss buying and a spike to 1.3360, initially, while hanging a target on 1.3500. A break below 1.3190 may lead back to 1.3050. For today, USDCAD support is at 1.3240 and 1.3190. Resistance is at 1.3305, 1.3320 and 1.3360.
Today’s Range 1.3220-1.3305