Overnight Range   1.2912-1.3013              

The US dollar has carved out gains in New York trading, in part due to hawkish comments from Boston Fed President Eric Rosengren stating that a case can be made for gradual tightening and warned of risks from waiting to long.  Nothing new, but just enough to encourage traders to trim positions ahead of the weekend.

USDCAD was in demand to start the day and it has been that way ever since. News that North Korea successfully conducted another nuclear test appears to have spooked the commodity currency bloc. AUDUSD has dropped to 0.7577 from 0.7654. Kiwi is down to 0.7337 from 0.7412.

Oil prices have also dropped.  WTI is trading at $46.54/b, down from its overnight peak of $47.27/b. That move may be due to a degree of skepticism following yesterday’s EIA report of a huge decline in crude stocks.

China inflation data was lower than expected. (Aug. Actual 0.1% vs forecast 0.3%, m/m)

EURUSD went nowhere overnight, content to drift within a 1.1260-1.1283 range.  The single currency has been declining since New York started the day due to Rosenberg’s remarks and pre-weekend profit taking.  USDJPY has rallied in concert with the stronger US dollar. Sterling was choppy. GBPUSD rallied from 1.3287 to 1.3334 in Asian and then retraced the entire move in Europe.   The UK trade deficit narrowed and construction sector data improved.

USDCAD technical outlook.

 The intraday USDCAD technicals are bullish while trading above 1.2920.  The break of the 1.2980 level has set the stage for a retest of the 1.3050-70 zone.  A move below 1.2920 will lead back to 1.2850.  Longer term, USDCAD is in a modest uptrend while trading above 1.2900, inside a well-defined 1.2650-1.3250 trading band. 

For today, USDCAD support is at 1.2970 and 1.2920   Resistance is at 1.3010 and 1.3050.

Today’s Range 1.2950-1.3030