Range Friday close- Tuesday open- 6 am PST 1.2889-1.2985
Welcome back! The USDCAD decline precipitated by the weak US employment report continued unabated on holiday Monday and in overnight markets. The broad shift out of US dollars across the G10 spectrum due to greatly diminished September rate hike expectations overshadowed falling oil prices leading to stop loss selling of USDCAD on the break below 1.2940.
Monday started with a lot of comments from the G20 meeting in China although none of them had any impact on FX markets. USDJPY declined from 104.14 to 103.14. EURUSD bounced within a 0.0050-point range ignoring weaker than expected Eurozone PMI data. UK service PMI gave GBPUSD a short lived boost.
On Tuesday, the RBA didn’t provide any surprises and left interest rates unchanged. The statement acknowledged that the global economy was growing at a lower than average pace, a comment which may be in tomorrow’s Bank of Canada statement as well. AUDUSD and NZDUSD are well-above Friday’s close with a chase for yield providing some support. Eurozone GDP came in as expected which helped EURUSD.
Saudi Arabia and Russia said they agreed to cooperate in world oil markets They also said that they wouldn’t act immediately but could limit output in the future. The news was rightfully ignored.
USDCAD opened at the overnight low and has drifted higher ahead of the Bank of Canada policy decision. The statement is expected to be benign. The risk that the Q3 outlook would be downgraded diminished following the better than expected Trade report on Friday.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish. The break below support at 1.3000 and 1.2940 has the uptrend line from the mid-August low under assault and put a target on 1.2840. In addition, the move below 1.2908 (61.8% Fibonacci retracement of August-September 1.1.2760-1.3150 range) suggests further losses to the 76.4% level of 1.2852. A break below 1.2840 opens up a move to 1.2660. A break above 1.2960 would negate the downward pressure and shift the focus back to 1.3050. for today, USDCAD support is at 1.2880, 1.2840 and 1.2810. Resistance is at 1.2930, 1.2970 and 1.3010.
Today’s Range 1.2880-1.2960
