Overnight Range 1.3011-1.3080  

USDCAD was under pressure the entire overnight session and then extended those losses in early New York trading which led to a test of support at 1.3010.

The sell-off took a breather ahead of and following another round of robust US economic data which kicks the door open even wider, for a March rate hike. Jobless claims fell to  239,000 vs. a forecast of 245,000, the Philadelphia Fed Manufacturing Index popped to 43.3 while the forecast was for 18.0.  The only wrinkle in the rosy data  was weaker than expected Housing Starts which declined 2.6%. the Housing report was strong. The US dollar inched higher vs the majors,  on the news

The greenback was under pressure throughout the overnight session, losing ground against the majors with the exception of the antipodeans.

Yesterday’s report of a surge in US inflation spooked FX traders into taking profit on long US dollar trades in New York and that sentiment continued in Asia and Europe.

The Australian dollar attempted to rally with the other majors following a better than expected headline employment report and a dip in the unemployment rate. Those gains soon faded as the loss in full-time jobs was not a fair trade-off for an increase in part time jobs. AUDUSD peaked at 0.7730 and bottomed out at 0.7683..  The New Zealand dollar opened this morning almost unchanged from its close.

USDJPY continued to decline in Asia and Europe, falling from 114.30 to 113.44 in early New York trading.  The jump in US CPI combined with the steep gains that had occurred since the beginning of the month encouraged traders to lighten positions.

EURUSD climbed to 1.0654 when New York opened on the back of profit taking, encouraged by a lack of Eurozone data. EU and Greece debt discussions are on-going which has added another element of discord in the Eurozone, already fretting about elections in France.

Sterling tracked EURUSD higher.  GBPUSD continues to bounce erratically inside a 1.2375-1.2575 band. Rumours that the UK government would trigger Article 50 at the EU Summit meeting on March 9 were denied by Brexit Secretary David Davis.

Oil traders shrugged off the EIA report of another large build in US crude inventories preferring to believe that Opec production cuts more than offset US inventory gains. WTI jumped to $53.45 in early New York trading.

The Canadian dollar has shown its resilience. Yesterday, USDCAD soared to 1.3181 after the strong US data.  That move was short lived and USDCAD declined rapidly, closing at 1.3080. It fell further in overnight trading and bottomed out at 1.3010 just above major support in the 1.2990-1.3000 area. The stage is set for further losses.

Yesterday’s US dollar rally and reversal have left the existing ranges intact suggesting additional volatile range trading ahead.

Overnight Ranges

USDCAD Technical outlook:

The USDCAD technicals are bearish.   The series of lower highs stays intact after yesterday’s rally and reversal which will keep pressure on support in the 1.2960-90 area.  A break below 1.2960 would target 1.2820.  For today, USDCAD support is at 1.3010, 1.2990 and 1.2960.   Resistance is at 1.3070 and 1.3110.

Today’s Range 1.2990-1.3070

Chart: USDCAD 1 hour

Source: Saxo Bank

MEXICO  

The USDMXN decline from the middle of January appears to have found a base in the 20.2050 area, supported by the break of the downtrend line with the move above 20. 2740..  A break above 20.4450 would extend gains to 20.7700.  A break below 20.2050 would lead down to 20.1475

Chart: USDMXN 4 hour

Source: Saxo Bank