Overnight Range 1.3096-1.3139
USDCAD is starting the new month with a bid tone, supported by this mornings US data which provided additional support to the US rate increase cause. A sidelined Bank of Canada in the face of a possibly more active Fed combined with a weak oil price outlook, have boosted the prospects for a higher USDCAD.
Sterling was the big mover in Europe. GBPUSD soared to 1.3264 from 1.3130 following the release of surprisingly strong Markit Purchasing Manager Index data. UK August PMI was 53.3, far exceeding the forecast of 49.0 and much improved over July’s 48.3. So much for Brexit destroying the UK economy. (Although it has been only two months since the vote and no action has been taken) Cable has held on to those gains in New York trading EURUSD is at the lower end of its overnight range while USDJPY added to gains carved out in Asia.
PMI reports were the focus in Asia as well. China is back in “expansion territory with a PMI of 50.3 but Japan isn’t. Japan’s PMI was only 49.5 and that led to USDJPY demand. The China data gave AUDUSD a boost but those gains were erased by a soft Retail Sales report.
Oil prices remained under pressure and failed to gain any traction despite comments from the Saudi Oil Minister suggesting that Opec is moving toward a “common position”. WTI is currently $44.39 in New York.
The US ISM Manufacturing PMI (due at 7:00 am PDT) will be closely scrutinized for fresh evidence that the US economy is rebounding which would lift the prospects for a September rate hike. However, concern ahead of Friday’s nonfarm payrolls report (forecast 180,000) should temper trading enthusiasm today.
USDCAD technical outlook.
The intraday USDCAD technicals are bullish while trading above 1.3090 and looking to break resistance at 1.3150 to extend gains to 1.3190 and then 1.3250. A move below 1.3080 would target 1.2990 and suggest additional 1.2900-1.3150 consolidation. Longer term, the USDCAD uptrend from May remains intact while prices are above the 1.2750-70 zone. For today, USDCAD support is at 1.3090 and 1.3060. Resistance is at 1.3150 and 1.3190.
Today’s Range 1.3110-1.3190