USDCAD Overnight Range 1.3025-1.3092                           

USDCAD snapped the mini downtrend from the European peak in early Toronto trading following the release of soft Canadian data.  However, the bounce from 1.3030 to 1.3065 was shallow. The Current Account deficit widened to $16.8 billion (prior $15.7) as expected while both Raw Materials Price Index and the Industrial Product Price Index declined.

On Friday afternoon, Janet Yellen’s Fed policy comments were a tad more hawkish than markets expected.  She appeared to endorse what the prior flock of hawks were saying, which is that it would be “appropriate” to continue to “gradually and cautiously increase rates”. Asia trades glommed onto that phrase and bought US dollars, particularly against USDJPY. But Ms. Yellen wasn’t the only driver of USDJPY demand.  The Japanese Prime Minister was reportedly planning a supplementary budget in the ¥‡5-10 trillion area.  Weak Australian data contributed to the AUDUSD decline in Asia.

European traders (at least those at work) weren’t nearly as bullish on the US dollar as their Asia counterparts. The US dollar declined steadily through-out the session albeit on low volumes as the UK markets were closed which is setting the tone for North America markets. The US dollar selling may be due to month end portfolio rebalancing demand.

New York is closed for Memorial Day. Traditionally, this is the day when the major Canadian Banks host client outings and functions for their top tier clients.  (If you haven’t been invited to one, you know where you rank.) Today is likely to be quiet ahead of a busy rest of the week although today’ Memorial Day trading won’t be memorable. It will be a busy week ahead due to month end and Friday’s US nonfarm payrolls data.

USDCAD technical outlook

The intraday USDCAD technicals are mildly bearish while trading below 1.3060. looking for a move below 1.3020 to extend losses down to 1.2970.  A move below 1.2970 sets up a test of support in the 1.2900-30 area. Meanwhile the uptrend from the beginning of the month is intact while prices are above 1.2930.  For today, USDCAD support is at 1.3020 and 1.2970.  Resistance is at 1.3060 and 1.3090.

Today’s Range 1.3020-1.3090

Chart: USDCAD hourly