The Loonie got its feather plucked and Moody’s Investor Services was the plucker.  The rating agency downgraded the six largest Canadian banks on fears that rising private sector debt could lead to a deterioration in the quality of the banks’ assists.

The report was released on Wednesday after domestic markets had closed.  Asia traders bought USDCAD, taking it from 1.3655 to 1.3741.   European traders were not too bothered with the news and USDCAD retreated to 1.3685 by the New York open.

The combination of the 0.2% rise in the Canada New Housing Price Index for March, the surge in US Producer Prices and the drop in Initial Jobless claims, gave the US dollar  a bid.  USDCAD soared to 1.3769 but has since dropped back to 1.3715.

Close

 Open

 

10-May

 11-May High

Low
USDCAD 1.3653 1.3685 1.3741 1.3657
EURUSD 1.0866 1.0870 1.0891 1.0863
USDJPY 114.25 114.16 114.36 114.07
GBPUSD 1.2944 1.2923 1.2947 1.2905
USDCHF 1.0089 1.0080 1.0094 1.0074
AUDUSD 0.7365 0.7369 0.7337 0.7339
NZDUSD 0.6938 0.6844 0.6864 0.6819
USDMXN 18.9965 18.9260 19.0320 18.9260
WTI   47.37 48.07 48.13 47.38

Euro and Sterling dropped and yen rallied in New York, although the Bank of England was the big factor in GBPUSD.

GBPUSD dropped from 1.2930 to 1.2850 following the Bank of England policy announcement and weak domestic data. The BoE’s concern about how the Brexit negotiations will  shake out offset the modestly upbeat assessment of the economy.

The strong US data knocked EURUSD below support at 1.0850 but the move was not sustained.  EURUSD continues to be driven by US interest rate concerns and the risk of tapering by the ECB.

The New Zealand dollar got beaten up overnight.  The Reserve Bank of New Zealand left interest rates unchanged and delivered a doveish statement.  NZDUSD gapped lower, dropping from a pre-announcement level of 0.6937 to 0.6818 after the news.

AUDUSD dropped in concert with the Loonie and Kiwi in Asia but reversed those gains completely in Europe. AUDUSD open in New York a tick higher than where it was at the close.

Oil added to yesterday’s large gains, with WTI rising from $47.22 to $48.10 at the New York open. Oil is benefiting from the large crude drawdowns reported by the API on Tuesday and confirmed by the EIA yesterday.  In addition, Saudi Arabia’s cut in supply to some Asia customers is helping the tone.

USDCAD Technical outlook:

The intraday USDCAD technicals are unchanged from yesterday.  They are bullish while prices are above the 1.3640-70 area and looking for a move above 1.3780 to extend gains to 1.3850.  A break below 1.3640 would target support at 1.3520.  For today, USDCAD support is 1.3670 and 1.3640.  Resistance is at 1.3730 and 1.3780.

Today’s Range 1.3680-1.3780

Chart: USDCAD 4 hour