USDCAD Overnight Range 1.3409-1.3467
Yesterday’s USDCAD plunge ran into an oil reality wall at the end of trading yesterday. The weekly API Crude stocks report showed a massive 9.9 million barrel increase which took the steam out of WTI gains and put a short term floor in USDCAD. At issue is; will the Russia/Opec production cap agreement (covering 73% of global production) be enough to off-set weakening demand? Regardless, sentiment has improved and that has helped to limit WTI losses.
USDCAD drifted higher overnight and during early New York trading today but the gains appear to be more of a correction while trading below the 1.3480-1.3510 area. Today’s ADP employment report posted a 214,000 gain, well above the 190,000 forecast which bodes well for those expecting Friday’s nonfarm payrolls report to surprise to the top.
Overnight, Aussie and yen shared center-stage in the Asia session. Australia Q4 GDP grew at 3%, handily beating consensus of 2.5% and the currency jumped to 0.7240 from .7160. It has since pared back those gains in Europe. A 4.1% rally in the Nikkei powered USDJPY from 113.80 to strong resistance in the 114.50 area. Fiscal year end madness and the Government Pension Investment Fund (GPIF) activates contributed to the move. Chinese equity induces were on a tear posting 4% gains.
Both Euro and Sterling were fairly subdued during the European session. EURUSD traded sideways and ignored data and doveish comments from ECB speakers. GBPUSD ignored some soft data and bounced between 1.3910 and 1.4000.
The Energy Information Administration (EIA) report due at 7:30 am PST may make or break oil prices and USDCAD. If last week can be used as a guide, WTI prices may rally if the EIA result is less than 3.5 million barrels, or for that matter less than the API report. Anything close to the 9.9 million barrel build reported by the API would drive USDCAD higher and WTI lower.
USDCAD technical outlook
The USDCAD technicals are bearish. USDCAD is in a downtrend from last week which started with the break of support at 1.3620 and now comes into play at 1.3510. That downtrend is inside the longer term, gently sloping down trend channel from January 25. For today, USDCAD support is at 1.3430, 1.3390 and 1.3360. Resistance is at 1.3480, 1.3510 and 1.3550
Forecast Range for the day 1.3410-1.3510
Chart USDCAD 1 hour
