USDCAD survived the somewhat convoluted message delivered by Bank of Canada Governor Stephen Poloz on Wednesday.  The BoC raised the overnight rate by 0.25% as widely expected and then expressed concern about the future of the Nafta agreement.

USDCAD, which was trading at 1.2410 just before the announcement, dropped to  1.2367 and soared to 1.2523, inside a few minutes. By the time the Governor’s press conference concluded, USDCAD settled in the 1.2450 area.

According to Mr Poloz, the BoC continues to be “data-dependent”, not Nafta dependent.  However, the negotiations cloud the outlook.   Economists concluded that future rate hikes, justified by an expected bump in domestic growth and increased employment, will be at a slower pace than previously thought.

Yesterday afternoon, Apple announced new US investment plans that included repatriating around $250 billion sitting offshore.  The news boosted the US dollar.

Asia opened with AUDUSD rising on the back of strong employment data. The move was not sustained.  Prices dropped to 0.7940 but rebounded after China posted better than expected Q4 GDP data. (GDP Actual 6.7%, y/y vs forecast 6.7%.)    The strong China data underpinned NZDUSD as well.

USDJPY popped on the Apple news and held on to those gains overnight, supported by firm US treasury yields which are at 2.60%.

There weren’t any major data releases from the Eurozone or UK  which led to EURUSD and GBPUSD consolidating recent moves  The US dollar opened in New York with tiny gains against CAD, JPY and AUD while posting small losses against the rest.

WTI oil prices jumped from $63.81 at yesterday’s close to $64.32 after API reported a 5.121 million barrel drop in US crude inventories. Prices slipped from the peak during the European session, and WTI opened at $63.94/b

Today’s US data releases include Jobless Claims, Philadelphia Fed Manufacturing Index, Housing Starts,  and Building Permits.  There aren’t any Canadian reports.  FX traders will be alert for other major repatriation announcements while keeping an eye on political developments.  US politicians need to pass a budget bill to avoid shutting down the government on Friday.

USDCAD Technical outlook:

Yesterday’s BoC statement didn’t change the technical picture.  USDCAD is in a downtrend after the September uptrend was snapped in late December.  The downtrend stays intact while prices are below 1.2550 and is aiming for a break of support at 1.2350 to extend losses to 1.2240 and then 1.2060.  For today, USDCAD has support at 1.2420 and 1.2380.  Resistance is at 1.2470 and 1.2510.

Today’s Range 1.2390-1.2470