USDCAD Overnight Range 1.4143-1.4298  

Yesterday’s massive Canadian dollar rally accelerated overnight, fueled by a steep rise in oil prices. In a stunning reversal, USDCAD has retraced 70% of the Jan. 4-Jan.20/16 gains in just over 2 days. It touched 1.4688 in Europe on Wednesday, ahead of the Bank of Canada decision, hit 1.4143 this morning and is currently sitting at 1.4175.

This mornings release of Canadian Retail Sales and CPI data were mixed. Retail Sales for November beat expectations (1.7%) but there is concern that those numbers poached sales from December. CPI and core CPI both were a touch lower than forecast which provided USDCAD with a little support.

Overnight, WTI rallied from $29.53/barrel to $31.04/b, a gain of 5% and it currently sits at $31.14/b. The only rationale offered for the move is the cold snap along the US East Coast and in parts of Europe. Well, Duh! That area gets cold in January every year.

In Asia, the Nikkei led Asian equity indices higher and closed with a gain of about 5.9% which also helped USDJPY rise. The “happy” feeling spread to Europe and lifted all the major European bourses although they are still slightly worse off then where they were on Monday.

EURUSD traded sideways and isn’t too far off the levels prior to Draghi’s suggestion, yesterday, of additional ECB stimulus action in March. Once bitten twice shy.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.4320 supported by the break of support at 1.4240 which is now targeting the January uptrend line in the 1.4140-50 area. A break of this level would lead to 1.3815 and a complete retracement of the January rally. For today, USDCAD support is at 1.4140, 1.4105 and 1.4085. Resistance is at 1.4210 and 1.4240

Chart USDCAD hourly with Fibonacci retracement