USDCAD Overnight Range 1.2905-1.3019        

This morning’s USDCAD plunge reversed course on a mix of pre-weekend profit taking and a mixed to soft Canadian employment report. Canada gained 12,100 jobs in September, beating the forecast for a gain of 10,000. Unfortunately, the details were less than stellar. The unemployment rate edged higher to 7.1% and the job gains were all part-time.  Full-time jobs declined.

USDCAD rallied from 1.2930 to touch 1.2980 after the release but this move may be more a factor of profit taking ahead of the Canadian long weekend then concern about the data. This report is notoriously volatile and subject to large revisions. More than likely, the data will soon be forgotten if WTI continues to move higher.

The overnight break of key resistance in the 1.2950-1.3000 area overnight is significant.  It was fueled by widespread US dollar weakness and a rally in oil prices due to yesterday’s FOMC minutes being deemed doveish. Traders apparently believe that they greatly diminish the prospects for a rate hike in 2015. Subsequently, the “risk-on” light flashed green and the US dollar was sold.  The commodity bloc currencies are the star performers.

The oil price rally is occurring in what appears to be “hopes” that prices will rise based on “expectations” of cooperation by Opec and non-Opec countries. On the other hand, Goldman Sachs analysts point out that over supply issues have not diminished, let alone disappeared, which questions the staying power of the current WTI price surge.

The Thanksgiving holiday and Columbus Day in the US will make for a very quiet afternoon session.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.3000 aided by the break of support at 1.2950 which risks a deeper drop to 1.2800.  The move below 1.3070 on the daily charts negated an uptrend that had been in place since May.  For today, USDCAD support is at 1.2905 and 1.287. Resistance is at 1.2280 and 1.3010

Today’s Range 1.3020-1.3090

Chart USDCAD 4 hour