USDCAD   Overnight Range 1.2950-1.3045  

A strong and much needed rebound in Canadian Retail Sales data for May (Actual 1.0% vs. forecast 0.5%) provided the Loonie with an ever-so-modest and extremely short lived gain this morning. USDCAD dipped about 0.0010 points to 1.2957 and then reversed course and is now above 1.3000 again. That’s because the data is considered “stale”. Meanwhile today’s weekly US Jobless claims report was released at the same time and it is fresher and therefore relevant. Jobless claims declined to 255,000 and refocused traders on the prospect for a September rate hike. The US dollar gained across the board.

Overnight saw a continuation of the previous day’s US dollar sell-off. Kiwi dominated the Asian session. The RBNZ delivered the expected 25 bp rate cut and in a classic “sell-the-rumour, buy-the –fact” move NZDUSD rallied to 0.6690 from 0.6570.

European FX trading was choppy albeit with lower than usual volumes. The EURUSD jump to 1.1000 from 1.0925 left traders scratching their heads for a reason.The jobless claims data drove EURUSD back to 1.0960. In Britain, a poor UK retail Sales report triggered a dive in GBPUSD and it hasn’t recovered.

The prospect of lower oil prices and higher US rates will limit any near term USDCAD losses.  WTI is in a downtrend while trading below $50.52/bbl with yesterday’s breach of support at $49.70 expected to cap intraday gains. September is still the favoured month for a US rate increase, reinforced by today’s jobless claims data.

Technical Outlook

The USDCAD intraday technicals have flipped back to bullish following this morning’s failure to extend losses below 1.2950 and its subsequent rally above intraday resistance at 1.2990 argues for additional 1.2950-1.3050 consolidation. The uptrend from the beginning of the month remains intact while trading above the 1.2900-30 area.

Today’s Range 1.2960-1.3020

Chart: USDCAD 30 minute showing break of intraday resistance