USDCAD Overnight Range 1.2647-1.2729        

The steady USDCAD decline evident in the past week has taken a bit of a breather today due to general US dollar sluggishness across the G10.  It appears to be a case of “we’ve moved a lot in recent days, now what?”. A drop in oil prices didn’t help sentiment either.

The Kuwait oil workers strike came to an end during very early Asia trading when the Kuwait government said “end it” or words to that effect. That news came on the heels of the American Petroleum Institutes (API) weekly Crude Oil stocks report which showed a build of 3.1 million barrels. WTI, which was trading at $41.08 dropped to a low of $39.80 before recovering to $40.12, where it currently sits.

In Asia, the drop in oil led to AUDUSD selling but that didn’t last and AUDUSD recovered almost all of its losses in Europe. USDJPY drifted lower in Asia while ignoring soft Merchandise Trade data but it to, recovered its losses in Europe.

GBPUSD held on to its lofty perch in the 1.4400 area despite a soft employment report. EURUSD traded sideways ahead of tomorrows ECB meeting, which most expect to be a non-event.

Bank of Canada Governor, Stephen Poloz, didn’t deviate from his Monetary Policy Report remarks in his address to the House of Commons Finance Committee, yesterday. That was expected. He speaks again today but this time to the Senate Banking, Trade and Commerce Committee.

The allure of easy money was the Smuggler’s Blues (Glen Frey, 1984) and the allure of CADUSD 0.80 cents may give dollar bulls the blues. Round numbers are very attractive to FX traders, for no good reason, yet time and time again trades gravitate to these levels.  USDCAD 1.2500 equals CADUSD 0.80 cents and in the absence of any drivers that would reverse the general bearish US dollar sentiment, a test of 1.2500 is very likely in the coming days.

Tomorrow’s ECB meeting and oil price uncertainty is enough risk to keep FX traders close to home today suggesting additional consolidation of recent ranges is likely.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.2730 but needing a break of minor support at 1.2630 to extend losses to 1.2550. and then to below 1.2500 which represents the psychologically important support level of 0.80 cents. A break above 1.2730 risks a test of 1.2820 and then 1.2900. Longer term, the downtrend from February remains intact while below 1.3000.

Today’s Range 1.2630-1.2720

Chart: USDCAD  30 minute