The Canadian dollar has taken a bit of a breather following last week’s sharp rise. USDCAD has been consolidating in a 1.2950-1.3010 range since Thursday afternoon, and that is unlikely to change today.
The Bank of Canada is widely expected to raise interest rates by 0.25% on July 12th and many economists expect another move in October. The Bank of Canada’s sudden U-turn on policy starting June 12 has caught the speculative community short CAD/long US dollars. Unwinding of these positions should limit topside gains and could hasten a move to 1.2770 if stop losses get triggered.
Overnight Ranges
| 30-Jun-17 | 4-Jul-17 | |||
| Close | Open | High | Low | |
| USDCAD | 1.2965 | 1.3004 | 1.3012 | 1.2978 |
| EURUSD | 1.1420 | 1.1349 | 1.1376 | 1.1336 |
| USDJPY | 112.45 | 113.20 | 113.42 | 112.75 |
| GBPUSD | 1.3025 | 1.2928 | 1.2957 | 1.2917 |
| USDCHF | 0.9590 | 0.9653 | 0.9655 | 0.9623 |
| AUDUSD | 0.7686 | 0.7600 | 0.7680 | 0.7592 |
| NZDUSD | 0.7322 | 0.7272 | 0.7295 | 0.7265 |
| USDMXN | 18.1380 | 18.2190 | 18.1695 | 18.0930 |
| WTI | 46.25 | 46.94 | 46.42 | 45.94 |
| Close 4:00 pm EDT-Open 6:00 am EDT | ||||
ECB officials may be having second thoughts to Mario Draghi’s hawkish (sounding) turn of two weeks ago. Yesterday, Reuters, citing “ sources,” claimed that ECB officials were unhappy with the market’s reaction and they may try to put the rate hike/taper genie back in the bottle at the next meeting. EURUSD eased from 1.1445 to 1.1345.
Sterling has walked back from its 1.3020 peak and is now trading at 1.2930 after GBPUSD traders reacted to weaker than expected PMI data and pared back rate hike hopes.
The Reserve Bank of Australia decided not to join the rate hike central bank group. Instead, they left rates unchanged and delivered a benign statement. AUDUSD dropped from 0.7680 to 0.7590 in a hurry, as AUDUD bulls chopped positions.
Gold was the big story on Monday. It was already offered when New York started. It opened at $1,234.80, and accelerated down to $1,219.71. The prospect of higher US rates and bearish technicals fueled the move. Prices recovered, somewhat, overnight and gold is trading at $1,224.66.
USDCAD Technical outlook:
The USDCAD technicals are bearish. Downtrend lines that come into play at 1.33 and 1.3100 will keep the focus on support in the 1.2950-65 area which represents Fibonacci levels and prior bottoms. A decisive break below 1.2950 will extend losses to 1.2770 and possibly 1.2460. For today, USDCAD will consolidate inside a 1.2950-1.3010 range
Today’s Range 1.2950-1.3005
