Overnight Range 1.3057-1.3137
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-July 21 (4pm) to 6:00 am PDT
USDCAD started today with a bullish bias and flirting with major resistance in the 1.3150-1.3200 range. Traders seemed resigned to an eventual test and breach of the upper level. Then StatsCanada released the monthly Retail Sales and Inflation reports. Both surpassed expectations. USDCAD plummeted from an overnight peak of 1.3137 to 1.3057 before a minor (so far) profit taking bounce.
A major reason for this week’s USDCAD rally was the drop in oil prices. WTI has been a tad volatile over the past few day, in part due to technical issues around contract settlement but mostly due to bullish trades capitulating on the break of support at $44.80/b. It didn’t help that US Crude Inventories, especially gasoline remain at elevated levels.
Elsewhere, FX markets were subdued. EURUSD churned with a narrow 1.1020-40 range and ignored better-than-expected Eurozone PMI data. Sterling showed signs of life. GPBUSD drifted higher in Asia and early European trading, reaching 1.3288 before it turned ugly. UK PMI data missed the forecasts and GBPUSD plunged to 1.3087.
In Asia, USDJPY traded choppily within a 105.55-106.25 range with USDJPY bulls still reeling from the downgrading of Bank of Japan stimulus plans. AUDUSD and NZDUSD consolidated within yesterday’s ranges.
USDCAD technical outlook.
The intraday USDCAD technicals turned negative with the morning drop below 1.3100. That sentiment may prove temporary if USDCAD cannot extend losses below this week’s uptrend line which currently sits at 1.3050, the same level where today’s sell-off halted. A break through 1.3050 should extend losses to 1.2770. Another move above 1.3090 puts the focus back on the 1.3150-1.3200 level. For today, USDCAD support is at 1.3050, 1.3010 and1.2970. Resistance is at 1.3110, 1.3150 and 1.32
Today’s Range: 1.3020 1.3110
Chart: USDCAD hourly