Overnight Range 1.3015-1.3085                    



NOTE:  This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-July 19 (4pm) to July 20, 6:00 am PST

USDCAD started the day with a bid tone and is currently testing key resistance in the 1.3080-90 area. Yesterday’s end-of-day American Petroleum Institute Crude Stocks Change report didn’t do the Loonie any favours. The decline of 2.3 million barrels, week over week, looked good until traders noticed the 805,000 barrel gain in gasoline.  The summer is the “driving season” and if gasoline supplies are increasing it doesn’t help alter the supply/demand equation.  Furthermore, the Russian Oil Minister, Alexander Novak, said that he has ruled out possible coordination with Opec. These two events have re-ignited downward pressure in WTI which currently sits at $43.07/b

FX markets weren’t overly bothered by yesterday’s news that the IMF had downgraded 2016 world growth to 3.1% from 3.2% due to the Brexit vote.  In Asia, AUDUSD decline on a soft Leading Indicators report.  USDJPY squirted higher, with expectations of BoJ stimulus action in the near future, keeping USDJPY bid.

EURUSD traded sideways for most of the overnight session before sinking in Europe. That move coincided with a spike in GBPUSD fueled by news that a Bank of England report found “no evidence” that a sharp economic slow-down was occurring, post Brexit.  That conclusion is likely to change in the coming weeks.  GBPUSD got additional support after the UK posted the lowest unemployment rate in 11 years, 4.9%.

The US dollar is sitting with gains against the majors except for Sterling.

The EIA Crude Stocks report is the only game in town in terms of US data which will be the key driver for USDCAD direction.  The market is expecting another drawdown but the details will be key.  Other than that, it will be technicals and US equity’s that provide trading direction.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.3010 and looking for a break above 1.3080-90 to extend gains to the 1.3150-1.3200 resistance area. A retracement below 1.3000 would lead to further losses back to 1.2960 and then 1.2910.

For today, USDCAD support is at 1.3040, 1.3010 and 1.2960. Resistance is at 1.3090, 1.3130 and 1.3160

Today’s Range: 1.3020-1.3120

Chart: USDCAD hourly