USDCAD Range 1.3077-1.3174

If the FX market was a ping-pong table, the Loonie would be the ping-pong ball. It has been smacked between 1.3075-and 1.3175 for the last 24 hours, bouncing of the floor and the ceiling with Ex-Lax quality regularity. It closed in New York at 1.3108 yesterday and opened this morning at 1.3170. It is now back at 1.3085 due to a bounce in WTI prices.(from $40.21 to $40.93, at the time of writing). Modest Canadian Wholesale Sales data and an as-expected US Jobless Claims report helped.

Yesterday ended in confusion. A Bloomberg reporter leaked the minutes 10 minutes early and then wrote a misleading headline. (Most Fed officials in July saw conditions for a rate rise nearing). FX markets became chaotic and left analysts scrambling to interpret the release. The conclusion seems to be that the FOMC minutes were hawkish for hawks and doveish for doves. The reality, is exactly as the Committee members have been saying. Data will determine the timing of a rate hike

The minutes weren’t the only story overnight. The steep plunge in oil caused Kazakhstan to drop its currency peg. The Tenge (KZT) dropped 23%, leading a host of emerging market currencies lower. In addition, Chinese equity indices were under pressure again, leading to declines in all the major global equity indices.

USDCAD will track WTI price movements for the balance of the day while waiting Friday’s Canadian Retail Sales and CPI data. FX sentiment remains bullish USDCAD suggesting that the market is more vulnerable to a correction if the data surprises to the upside. Weak data is expected.

Technical Outlook

The intraday technicals are bullish while trading above 1.3050, looking for a break of resistance in the 1.3180-00 area to extend gains to 1.3450.A move below 11.3050 would suggest that a short term top is in place and extend losses to1.2850. For today, USDCAD support is at 1.3070, and 1.3050. Resistance is at 1.3130 and 1.3180.

Today’s Range 1.3070-1.3150

Chart: USDCAD 4 hour with uptrend