Overnight Range 1.3174-1.3214                             

The Canadian dollar failed to capitalize on rising oil prices overnight. A modest improvement in Canada’s trade deficit (Actual -$1.84 billion vs. forecast -$2.6 billion) provided a bit of support. A weaker than expected ADP employment report helped to take the shine off the US dollar as well.

The overnight session started with EURUSD and AUDUSD being bought while Kiwi, Yen and Sterling were being sold.

AUDUSD continued to benefit from the Reserve Bank of Australia’s neutral bias which diminished risks of a near term rate cut.  That move didn’t last and AUDUSD came under pressure on the US interest rate outlook, which also supported. USDJPY.  NZDUSD suffered from the weak GlobalDairyTrade index released earlier in New York.

EURUSD rallied in the afternoon on Tuesday following a Bloomberg report that “sources” at the European Central Bank said that the central bank was discussing tapering. Other ECB officials have since denied the story but EURUSD remained bid.

GBPUSD traded at 1.2684, a level that hasn’t been seen for 35 years. Comments from Bank of England deputy governor Ben Broadbent that a sharply falling currency could lead to a rate hike made Sterling traders nervous.

Oil prices are on the move higher supported by the 7.6-million-barrel drawdown of US crude stocks reported by the American Petroleum Institute, yesterday. WTI rallied from $48.56 to $49.58.  There is a minor uptrend intact while prices are above $48.50. Unfortunately for USDCAD bears, the Canadian dollar has ignored this data.

The stage has been set for a busy day in FX.  The ISM non-manufacturing report is expected to rebound.  In addition, the weekly Energy Information Admiration (EIA) Crude stocks change report may show a large draw-down, if yesterday’s API report is any indication.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.3170.  A break above 1.3220 should lead back to 1.3280 and then 1.3320.  A move below 1.3160 will extend losses to 1.3110.  for today, USDCAD support is at 1.3170, 1.3140 and 1.3110.  Resistance is at 1.3220, 1.3250 and 1.3280.

Today’s Range 1.3160-1.3250