Overnight Range   1.3144-1.3239           

USDCAD started the day at the overnight low but that didn’t last. Buyers were evident from the get-go as traders tracked falling WTI prices. The weaker-than expected Canadian Manufacturing Shipments data (Actual 0.1% vs. forecast 1.0%) and a bump in US August CPI data (Actual 0.2% vs. forecast 0.1% m/m) launched USDCAD to 1.3239 from 1.3195.

It was a deathly dull overnight session made worse by holiday’s across Asia including China, South Korea, Taiwan and Hong Kong. USDJPY traders were eyeing a story in the Wall Street Journal suggesting that the Bank of Japan board was split over the bond buying program.

Europe was quiet as well until news that the US Justice Department proposed that Deutsche Bank pay a $14.0 billion fine to settle a mortgage-securities probe.  I am absolutely sure that it is merely a coincidence that the Deutsche Bank fine more or less equals what the EU was claiming from Apple.  European equity indices are in the red while the FTSE100 is flat.

Oil supply concerns continue to weigh on oil prices.  This week’s oil news including the IEA report of reduced global, the EIA report that Distillate Stocks rose substantially and renewed supply from Nigeria and Libya have WTI prices below yesterday’s lows ($43.13/b).  A decisive break below $42.50 would extend losses to $39.25. In that environment, USDCAD would be testing resistance at 1.3280.

This morning’s US CPI data gave the US dollar a boost across the board as it helps to keep September rate hike hopes on life support.

USDCAD will continue to be underpinned by weak oil prices, soft domestic data and the firmer than expected US CPI data.

USDCAD technical outlook.

The intraday USDCAD technicals are modestly bullish.  Yesterday’s break below 1.3190 snapped a one-week uptrend from the 1.2850 level. However, the subsequent decline was shallow and not sustained. As long as USDCAD remains above support in the 1.3140-50 area, yesterday’s price action was merely a correction and the uptrend remains intact.  Longer term USDCAD resistance in the 1.3250-80 area has capped rallies since May and should prove formidable.  For today, USDCAD support is at 1.3180 and 1.3140.  Resistance is at 1.3250 and 1.3290.

Today’s Range 1.3190-1.3280