USDCAD Overnight Range 1.3708-1.3840    

A surprise meeting between Russia, Saudi Arabia, Qatar and Venezuela led to an announcement that these nations would cap oil production at January’s levels. USDCAD dropped below 1.3800 and quickly tested 1.3705 and WTI rallied from $28.95/b to $31.53. The rally came to a screeching halt and WTI dropped back to $29.54 when traders realized that the agreement is only valid if other producers (like Iran) to join in. The other wrinkle in the deal is that it did nothing to curtail the issue of over-supply. USDCAD recovered back to 1.3840

Elsewhere, Asia continued to welcome China back from holidays and bought equities for the second day in a row. China’s SHCOMP and CSI 300 indices rose over 3% and the Nikkei added another 0.20% to yesterday’s 7.2% gain.  NZDUSD slipped following worse than expected Retail Sales data although low oil prices helped to explain part of the loss.

That wasn’t the story in Europe.  European equity indices are mixed in part because of bank concerns with today’s worse than expected ZEW data not helping confidence. EURUSD, which drifted lower on Monday, following another doveish Draghi speech didn’t extend those losses and has drifted back to 1.1170 from 1.1120. GBPUSD rallied at the onset of European trading but has given back most of those gains.

The Canadian dollar ignored the better than expected Manufacturing shipments report (Actual 1.2% vs. forecast 0.7%) and is on the defensive.

USDCAD technical outlook

The USDCAD technicals are bearish while trading below 1.3920 and needing a break of support at 1.3700 to extend losses to 1.3635 and then 1.3500.  The intraday technicals turned bullish with the move above 1.3790 supported by the break of 1.3820 which now targets a test of the 1.3920 downtrend line from mid-January.  For today, USDCAD support is at 1.3810, 1.3770 and 1.3730.  Resistance is at 1.3880 and 1.3920

Forecast Range for the day 1.3820-1.3920

Chart USDCAD 4 hour