Overnight Range   1.3041-1.3136           

The Canadian dollar was basking in the glow of a brighter outlook for oil prices prior to the release of CPI and Retail Sales data. The much weaker than expected reports gutted the Loonie. (CPI Actual -0.2, vs forecast 0.1 m/m; Retail Sales-Actual -0.1 vs. forecast 0.1 m/m)

USDCAD rallied to 1.3126 from 1.3028.

The New York morning was just getting started when a headline shot across the screens. “Saudi’s offer oil cut if Iran freezes output”. That caused a minor kerfuffle.  WTI, which had drifted steadily lower during the European session, was sitting at $46.50. It immediately spiked to $46.25 on the news. USDCAD dropped to 1.3038 from 1.3075 on the news but those losses were erased following the Canadian data.

In Asia, USDJPY ticked higher on profit-taking ahead of the weekend but couldn’t hang on to the gains. Japan Manufacturing PMIO beat expectations with a 50.3 print. (forecast 49.3).  AUDUSD and NZDUSD moved sideways until Europe opened and then dropped to the low of the session. The prospect of additional rate hikes by the Reserve Bank of New Zealand has undermined Kiwi.

In Europe, Eurozone and German Manufacturing PMI’s were above the consensus. Germany posted 54.3 vs forecast of 53.1 while Eurozone was 52.6 vs. forecast 51.5.  EURUSD ticked higher on the data. Meanwhile, negative news stories about the impact of Brexit on the UK’s banking industry have driven GBPUSD below 1.3000, again.

The apparent confusion at the Fed and disappointment from the Bank of Japan’s actions will ensure position adjustment trading will dominate today’s moves.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish above 1.3025 but need a break above 1.3150 to determine if this morning’s price action is another trend reversal and not just a correction.   A break above 1.3150 targets 1.3190 and then 1.3250. If 1.3150 holds, another drop back to 1.3050 is in the cards.  For today, USDCAD support is at 1.3080 and 1.3050.  Resistance is at 1.3150 and 1.3190.

Today’s Range 1.3080-1.3160