The Canadian dollar is well on its way to 80 cents and may even hit that level today. Canadian inflation rose 1.0%, year over year in June.  It was expected.  The June, month over month data rose 0.2%, contrasting with the 0.2% decline in May.  These readers bolster the Bank of Canada’s argument that low inflation readings are temporary.  May Retail Sales surpassed the 0.2% forecast and rose 0.6%.

USDCAD dropped from 1.2575 to 1.2547.  There isn’t a whole lot of support between 1.2570 and 1.2465.

USDCAD isn’t declining in a vacuum.  Broad US dollar weakness stemming from concerns that the Fed won’t be hiking rates again in 2017, and rising confidence that the ECB will begin tapering QE in the fall has led to widespread US dollar selling.

EURUSD held on to yesterday’s gains, in Asia, and added to them in Europe, reaching 1.1676 before drifting back.  ECB President Draghi was at his doveish best yesterday but his words were ignored.  FX traders expect the ECB to begin tapering the QE program in September, regardless of what Mario is telling them

Sterling has recouped all of yesterday’s losses thanks to broad US dollar weakness.

USDJPY tried to rally in Asia, but that move petered out just before Europe opened.  USDJPY dropped from 112.07 to 111.28 in New York trading.

The Australian dollar was the big mover overnight.  Deputy Governor Guy Debelle said in a speech: “Just as the policy rate in Australia did not need to decline to the very low levels seen in other parts of the world, the fact that other central banks increase their policy rates does not automatically mean that the policy rate here needs to increase.”

AUDUSD plunged from 0.7958 to 0.7856.

NZDUSD rallied after the Finance Minister told Bloomberg that he wasn’t worried about the currency as the New Zealand economy and businesses were performing well at current levels.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish while prices are below 1.2605. A break below 1.2550 sets up a straight shot down to 1.2465, a level last seen on May 3, 2016.  Longer term, USDCAD downside stays intact below 1.2770.  For today, USDCAD support is at 1.2570 and 1.2510. Resistance is at 1.2605 and 1.2650

Today’s Range 1.2490-1.2590

Chart: weekly