USDCAD Overnight Range 1.3283-1.3362    

USDCAD climbed steadily overnight and opened in New York at session highs.  Part of the move was due to profit-taking ahead of tomorrow’s Bank of Canada meeting while the other part was due to general US dollar strength on risk aversion.

Since then, USDCAD has been see-sawing within a 1.3310-60 band. This morning, a sharp drop in January building permits, (-9.8% vs forecast -2.5%) was all the excuse traders needed to switch from selling to buying USDCAD, while conveniently ignoring the jump in housing starts. (Actual 212.6K vs. forecast 180k).  That move is more a factor of positioning rather than a view on the health of the domestic economy.

It was a busy Asia session. Traders were as nervous as a fat man on thin ice and nothing makes them more nervous than “iffy” data from China. China reported that the February Trade Balance shrank to CNY210.0 billion (forecast CNY329.0 billion) led by a 20% decline in exports. It also led to declines in the major global equity indices although China’s indices rose.

Elsewhere in Asia, USDJPY dropped in concert with a falling Nikkei although both recovered somewhat by the New York open.  AUDUSD traders ignored the unchanged Business Confidence report.  NZDUSD came under pressure when Fonterra cut its milk price forecast.

In Europe, EURUSD traded sideways although with a modest bullish bias ahead of tomorrow’s ECB meeting and concerns that Mario Draghi’s stimulus plan will be more pea-shooter than bazooka.

USDCAD technical outlook

The intraday technicals are bullish while trading above 1.3305 looking for a break of 1.3375 to extend gains to 1.3450. A break below 1.3325 sets the stage for another visit to yesterday’s lows. The long term uptrend line remains intact above 1.3120 which is being guarded by multi-bottom support in the 1.3200-50 area and the 200 day moving average at 1.3291.  For today, USDCAD support is at 1.3310 and 1.3270.  Resistance is at 1.3375 and 1.3420

Forecast Range for the day 1.3310-1.3380

Chart USDCAD hourly