It is a quiet start to the FX week. The US dollar drifted aimlessly overnight.
Friday’s surprisingly strong Canadian employment data. (Actual 35, 300 vs forecast 15,000) combined with weaker US NFP data drove USDCAD to support at 1.2750 where it opened today. Prices have since backed up to 1.2770.
USDCAD sellers had an added incentive from rapidly rising oil prices. WTI oil touched $56.27 after Saudi Arabia’s Crown Prince Mohammed bin Salam orchestrated a purge of his competition. Another drop in the weekly US rig count helped.
In Asia, AUDUSD inched higher ahead of the RBA meeting on Tuesday while NZDUSD slipped ahead of the RBNZ meeting Thursday. Neither move was significant.
USDJPY spiked to 114.72 from 113.97 after President Trump complained about Japan’s trade practices. However the rally was reversed by the New York open. USDJPY was also supported by Friday’s US ISM nonmanufacturing ISM and Factory orders data which supports the view for additional US rate hikes.
EURUSD traded sideways with a negative bias, undermined by an ECB official’s comments about still seeing a need for monetary stimulus. The outlook for higher US interest rates also helped. A tiny gain in Eurozone Markit Services PMI data was offset my data misses in Germany, Italy and France.
Sterling consolidated last week’s losses but managed to rebound off of key support at 1.3050
Canada Ivey PMI is due today (Forecast 60.2 vs 59.6) and a stronger than expected number will lead to further USDCAD weakness. There isn’t much in the way of US data. Traders will look to oil prices and Trump trade tweets for direction
USDCAD Technical outlook:
The intraday UISDCAD technicals are bearish while prices are below 1.2790 looking for a break of minor support at 1.2740 to extend losses to 1.2670 and then 1.2605. A break above 1.2810 shifts the focus to 1.2900. Longer term, a break below 1.2720 suggests a drop to 1.2580, the 38.2% Fibonacci retracement of the September November range. For today, USDCAD support is at 1.2740 and 1.2705. Resistance is at 1.2790 and 1.2820
Today’s Range 1.2730-1.2790
Chart: USDCAD daily