USDCAD Overnight Range 1.3608-1.3733      

The Loonie slumbered during the overnight session and then was rudely awakened when New York traders started their day. USDCAD dropped from 1.3670 to 1.3608 when traders decided to sell US dollars in a bout of “risk-on” trading. The positive sentiment may have stemmed from the lack of contagion from the China equity market collapse during the Asia session.

The Shanghai Composite (SHCOMP) dropped 6.4% and the CSI 300 Index was down 6.1%. Last August and in January of this year, moves of that magnitude wreaked havoc across global financial markets. Today, totally ignored. Global equity indices all made decent gains and New York futures are higher as well.

In Europe, GBPUSD dipped when the second reading of Q4 GDP was revised lower and EURUSD traded sideways within a 1.0960-1.1050 band.

Oil traders determined that yesterday’s EIA news of a larger-than-forecast build in US Crude stocks of 3.5 million barrels was good news because it was smaller than the build reported by the API on Monday. WTI remains firm despite having pulled back from the overnight peak.

USDCAD may continue to grind lower for the rest of the day.  The Loonie is benefiting from mild “risk-on” sentiment due to a lack of contagion from the latest China equity market plunge, the break of key support in the 1.3640-60 area and relatively stable oil prices.

USDCAD technical outlook

The intraday USDCAD technicals are bearish.  Yesterday’s break of 1.3770 snapped a week long uptrend and todays break of key support at 1.3650 has opened the door to 1.3500-40. A break of 1.3520, representing the 61.8% Fibonacci retracement of Oct-Jan range would target the 76.4% level at 1.3255.  For today, USDCAD has support at 1.3605, 1.3580 and 1.3550.  Resistance is at 1.3650, 1.3680 and 1.3720

Forecast Range for the day 1.3570-1.3660

Chart USDCAD 1 hour