Overnight Range 1.3279-1.3360             

USDCAD plummetted late yesterday afternoon, falling from 1.3390 at 4:00 pm EDT to 1.3275 by 5:30 pm. The catalyst for the move was a statement by Bank of Canada Governor Stephen Poloz saying that “the BoC’s best plan (for interest rates) is to take a wait and see approach fro the next 18 months”.

He later clarified that statement  saying”My statement concerning the need to wait 18 months was in reference to the time frame over which the output gap is expected to close, as noted in the Bank’s October Monetary Policy Report. It was not intended as a reference to the Bank’s monetary policy.”

USDCAD bounced back to 1.3360, which was the high for the overnight session.

It was a slow-news day in Asia but concerns about a December rate hike drove USDJPY from 104.15 to 104.48

The antipodean’s inched higher during the overnight session. AUDUSD tracked higher in anticipation of strong inflation data later today which would reduce the risk of a rate cut.  In China, USDCNY was fixed higher for the thrid day in a row which is something to keep your eye on.

EURUSD traded in a narrow band.  Better-than expected German IFO data gave the single curreny a short-lived boost to 1.0893 but the gain didn’t hold.  GBPUSD traded sideways in a narrow range.

Oil prices oozed higher supported by comments from the International Energy Agency (IEA) projecting a rise of 1.2 million barrels per day in global oil demand for 2017.

Asia equity indices fininished the day on a positive note, except for China’s. The major European bourses are all higher and New York equity futures are suggesting a positive opening.

USDCAD bulls never quite recovered from the garbled message delivered by the Bank of Canada governor. Maybe the BoC really has no intention of cutting rates further.  Maybe the BoC just wants to keep markets guessing.. What ever the reason, the recent USDCAD rally was ripe for a correction.

US dollar bulls will continue to buy dollars if today’s October Consumer Confidence data (forecast 101.0) surpasses the previous month’s strong print. In addition, support will also come from better than expected Home Price data.  Later this morning, Bank of England Governor Mark Carney and European Central Bank President Mario Draghi will be speaking.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.3350.  Support at 1.3300-05 is looking extremely vulnerable and if it breaks, a retest of 1.3220 is likely. Currently, the uptrend line from the BoC meeting low is being tested.  The medium-term uptrend remains intact while prices are above 1.3050.

For today, USDCAD support is at 1.3305, 1.3250 and 1.3220.  Resistance is at 1.3350 and 1.3390

Today’s Range 1.3250-1.3350

Chart; USDCAD 4 hour