USDCAD Overnight Range 1.2573-1.2672    

USDCAD drifted lower throughout the overnight session on firmer oil prices following the Tuesday end-of-day American Petroleum Institute report. The API announced a drawdown of 1.1 million barrels compared to the previous week’s 3.1-million-barrel build. So far this morning, USDCAD bears have been reluctant to extend the losses ahead of this afternoon’s FOMC interest rate statement.

In Asia, AUDUSD got spanked on a weaker-than-expected inflation report. Q1 CPI was -0.2%, q/q vs. the consensus for a 0.5% gain.  AUDUSD fell from 0.7768 to 0.7605 as traders increased expectations for a RBA rate cut at next week’s meeting.

Sterling was busy in Europe. GBPUSD rallied into the Q1 GDP data release (Actual 0.4%) which was right on the forecasts and the gains were promptly erased. By the time New York opened, sterling was back at the pre-GDP peak.

Yesterday’s API data helped lift oil prices. WTI is currently trading at $44.96/b after touching $45.13 overnight.  If the API drawdown is confirmed by the Energy Information Administration (EIA) later this morning, look for additional WTI gains.

The FOMC statement is expected to have a mildly hawkish bias and open the door to a June rate hike although current levels in G10 currencies suggest that FX traders do not share the view.

USDCAD technical outlook

The USDCAD technicals are bearish.  The break below the previous 2016 low of 1.2595 has hung a target on the 1.2530-70 support zone representing prior break-out levels and the 76.4% retracement level of the May2015-January 2016 range.

Intraday, USDCAD is in a downtrend below 1.2620.  A break above this level would lead back to 1.2660 and then 1.2720.  For today, USDCAD support is at 1.2570, 1.2550 and 1.2530.  Resistance is at 1.2620, 1.2760 and 1.2720

Today’s Range 1.2550-1.2650

Chart: USDCAD  1 hour