USDCAD Overnight Range 1.2093-1.2200  

The Canadian dollar gained 3.5% against its US counterpart and outperformed against the rest of the G-7 currencies thanks to a less dovish Bank of Canada outlook, strong domestic data, higher oil prices and a generally soft US dollar.

Today’s Canadian CPI data (Actual 0.7% vs forecast of 0.5%) combined with a big jump in Retail Sales appears to have validated the slightly rosier outlook in the BoC’s Monetary Policy Report. The news led to additional demand for the Canadian dollar which managed to touch 1.2092 but has since bounced on the back of profit taking and a rise in the Michigan Consumer Confidence Index.

Overnight, the US dollar lost even more ground continuing the trend that started earlier this week when a series of weak economic reports crushed rate hike hopes for June and seriously debased the September call as well.

The Asian session was relatively tame but that wasn’t the case in Europe where the shifting outlook for US rates fueled EURUSD demand. A stronger than expected UK employment report put additional selling pressure on the US dollar and GBPUSD powered above 1.5000.

The outlook for the balance of the day will be one of consolidation. The US dollar should recoup some lost ground against the majors on profit taking ahead of the weekend.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.2210.A break of minor support at 1.2140 and 1.2090 will extend losses to 1.2050. (61.8% Fibo of 2015 range). A move above 1.2210 will lead to a test of 1.2250. The 38.2% Fibo retracement of the July 14-March/15 range comes in at 1.1980.

Today’s Range 1.2140-1.2210