USDCAD spiked higher in New York trading and traders are scratching their heads.

USDCAD rose from an opening level of 1.3654 and is flirting with 1.3710 as of (9:15 PDT).  Part of the move can be explained by the drop in oil prices.  WTI fell from $49.18 to $48.74/barrel but it is still above the overnight low.  There hasn’t been any domestic or US data, the antipodean currencies have barely budged and the majors have just trade sideways.  That suggests that the move is due to a large buy USDCAD order going through.  There has been a fair number of chunky M&A deals announced in the past few months.

USDCAD was very quiet overnight as were the other G10 currencies.

1-May 2-May High Low
USDCAD 1.3674 1.3654 1.3681 1.3654
EURUSD 1.0898 1.0918 1.0924 1.0898
USDJPY 111.79 1.12 112.23 111.79
GBPUSD 1.2889 1.2905 1.2912 1.2865
USDCHF 0.9962 0.9935 0.9964 0.9933
AUDUSD 0.7530 0.7531 0.7553 0.7521
NZDUSD 0.6912 0.6922 0.6934 0.6903
USDMXN 18.7425 18.7220 18.7426 18.6774
WTI   48.77 49.18 49.11 48.57

The Reserve Bank of Australia had an opportunity to steer AUDUSD.  They didn’t. The RBA left interest rates unchanged, acknowledged an uptick in global growth, gave a nod to China credit concerns and whined about a high AUDUSD slowing the transition from a mining based economy.

AUDUSD rallied on the news but not with any conviction.  It rose from 0.7221 to 0.7553 and the retraced the move by the time New York opened.  NZDUSD bounced inside a 0.6903-0.6934 range.

A dip in China Caixin April Manufacturing PMI data to 50.3 from March’s 51.7 level contributed to the AUD and NZD selling.

USDJPY rallied, rising from 111.79 to 112.23 by the New York open, supported by EURJPY demand and yesterday’s Treasury Secretary Mnuchin’s musings of a 50-year bond.

EURUSD inched higher despite a tiny dip in   Markit Manufacturing data (Actual 56.7 vs. forecast 58.8) and an unchanged Eurozone unemployment rate. (Actual 9.5%) EURUSD rose from 1.0898 to 1.0924 and opened in New York at managed to reach 1.09.18, inched down to 1.0885.

Austria Central Bank President, Ewald Nowotny said in an interview that the ECB would need to start talking about “future strategy:” at the June meeting.

Sterling had a bit of a yo-yo moment. GBPUSD dropped from 1.2907 to 1.2865 in Asia and early Europe trading undermined by the May/Juncker comments from earlier.  It rallied after better than expected UK PMI data, climbing from 1.2865 to 1.2920 at the New York open.

Oil prices bounced. WTI climbed to $49.21 from an overnight low of $48.53, supported by news that Russia oil production fell in March.

USDCAD Technical outlook:

The intraday and short term USDCAD technicals are bullish while prices are above 1.3620.  The 1.3850 area, being the 61.8% Fibonacci retracement of the 2016 range is the next target. A break below minor support at 1.3620 would extend losses to 1.3520, leaving the longer-term uptrend intact.  For today, USDCAD support is at 1.3650 and 1.3620.  Resistance is 1.3680 and 1.3730 and 1.3750

Today’s Range 1.3660-1.3730

Chart: USDCAD daily

Source: Saxo Bank