USDCAD Overnight Range 1.3312-1.3395      

USDCAD rode a kiddie roller-coaster overnight and an adult coaster this morning. Canadian 3Q GDP data was as expected but the month over month number was brutal, falling 0.5% when 0% was expected. Not surprisingly, traders bought USDCAD aggressively taking it to 1.3395 from 1.3315.  As usual the devil was in the details and these details were not as ugly as the headlines suggested.  The month over month number was impacted by fires and maintenance which shut down oil production. The data is in line with Bank of Canada forecasts so should have little impact on Wednesday’s rate decision.

Overnight, AUDUSD rallied when the RBA left rates unchanged and delivered a neutral statement with a modestly hawkish bite to it. Kiwi rode the Aussie rally higher.

The US dollar retreated across the G-10 spectrum, in part due to position adjustment ahead of Thursday’s ECB decision. A major concern to EURUSD is that short positions are huge and EURUSD has already come a long way from the August peak.  Mario Draghi needs to unveil a “shock and awe” stimulus package on Thursday or else disappointment may trigger a massive EURUSD short squeeze.  Eurozone data helped lift EURUSD in the early going but EURUSD gains continue to stall in the 1.0640 area. Data didn’t help sterling.  A weak PMI report snapped an intraday rally although GBPUSD is still well above yesterday’s low.

In Asia, bullish USDJPY traders got spooked by a WSJ report suggesting that Japan’s Government Pension Investment Fund (GPIF) was hedging EUR positions and USDJPY dropped.  The move was short lived

USDCAD technical outlook

USDCAD is locked within a 1.3240-1.3440 trading band and bouncing erratically within it. The intraday technicals are bullish while trading above 1.3310 but need to break through resistance in the 1.3395-1.3405 area to extend gains. A break of support at 1.3310 could lead to 1.3240.  For today, USD support is at 1.3310 and 1.3290. Resistance is at 1.3390 and 1.3410

Forecast Range for the day 1.3310-1.3390

Chart USDCAD 4 hour with intraday trading band noted