USDCAD Overnight Range 1.1.4336-1.4396
Another day, another drop in the Canadian dollar. The Loonie has lost 3.8% against the US dollar since the start of the year. Still, its performance outshines that of the New Zealand dollar which is down 5.9 % in that same period.
Asia markets were very nervous at the open and equities were sold. AUDUSD had a brief rally following the better than expected employment report, but it didn’t last. The Nikkei and USDJPY were all ready down when news of the Jakarta terrorist attacks hit the wires. They dropped further but started to recover before Europe started their day. The USDCNY fix was lower at 6.5616 and Chinese equity indices were higher. No other Asian bourses were.
EURUSD continues to chop around within a wide range and today was helped by a Reuters story quoting ECB officials as being sceptical about the need for further policy action in the near term. EURUSD rallied. The Bank of England minutes weren’t as doveish as anticipated and GBPUSD bounced off the overnight lows.
Oil price declines continue to undermine the Canadian dollar. The European oil benchmark Brent, dipped below $30.00/b for the second day in a row but it bounced. WTI is off its overnight lows as well, currently trading at $31.23/b which pushed USDCAD back from the 1.4400 level.
The Canadian dollar remains at the mercy of oil prices. Expectations of added Iranian supply before the end of the month combined with the on-going overproduction will keep USDCAD bid. And to make matters worse, there is now a chorus of bank economists predicting that the Bank of Canada will cut rates next Wednesday. If so, and if the USDCAD’s reaction to last January’s rate cut is any indication, USDCAD will be trading at 1.5000 by the end of the month.
USDCAD technical outlook
The intraday USDCAD technicals are bullish while trading above 1.4240 supported by the break of minor resistance at 1.4310. A break of 1.4400 will extend gains to the 1.4500 area which should also attract selling interest. A move below 1.4340 today will lead back to 1.4280. Longer term, the uptrend from November 30 remains intact above 1.4050.
For today, USDCAD support is 1.4340, 1.4280 and 1.4240. Resistance is at 1.4400, 1.4440 and 1.4460-1.4500
Forecasted Range 1.4340-1.4420
Chart USDCAD 4 hour chart