Overnight Range 1.3024-1.3081
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-July 12 (4pm) to NY Open July 13 6:30 am EDT
USDCAD opened near the bottom of its overnight range with traders clinging to risk-seeking sentiment following the strong US equity market closes. Pre-BoC meeting jitters and a slight dip in WTI prices lifted USDCAD back to the middle of the range.
It didn’t start out that way. USDCAD jumped to 1.3081 in Asia after the American Petroleum Institute (API) reported a 2.2-million-barrel build in the weekly crude stocks change data and WTI dropped. Aussie and Kiwi popped as well while USDJPY retreated on profit taking and concerns surrounding the expected stimulus package. China’s trade data was a tad softer than forecast but it didn’t seem to bother anyone.
Risk sentiment improved in Europe. The commodity currency bloc currencies rallied, despite oil prices remaining close to its overnight low. EURUSD traded heavily until mid-morning in Europe when it rebounded from 1.1040 to 1.1085 with European equity indices moving higher. GBPUSD spent the session consolidating its recent gains.
The Bank of Canada interest rate statement, press conference and Monetary Policy Report are due today. The recent mixed to soft data and the impact from the Alberta wildfires suggests that the BoC will be optimistically doveish which could drive USDCAD back toward resistance in the 1.3145 area. On the other hand, a doveish BoC is expected so a less dovish to neutral BoC and a rebound in oil prices will have USDCAD testing support at 1.2930. The EIA report would be the catalyst for the WTI rebound.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish while trading below 1.3090 looking for a break of 1.2980 to extend losses to 1.2920. If 1.2920 breaks, it opens the door to further weakness to 1.2835. A break above 1.3090 will shift the focus to resistance in the 1.3180-1.3200 zone. Longer term, the 1.2500-1.3200 trading band remains intact although the uptrend from the May low remains intact above 1.2850. For today, USDCAD support is at 1.3020 and 1.2980. Resistance is at 1.3090, 1.3140 and 1.3180.
Chart: USDCAD hourly with intraday downtrend noted.