USDCAD Range 1.3160-1.3180        

USDCAD dipped ahead of today’s Canadian and US employment reports and then promptly screamed higher when the result were posted.  US nonfarm payrolls gained 215,000, in line with guesses while Canada posted a slightly less robust gain of 6,600 for July. The US dollar bulls have taken control seeing today’s NFP report as collaborating Atlanta Fed Chairman Lockhart’s remarks earlier this week suggesting that the FOMC is likely to raise interest rates in September.

However, part of this morning’s US dollar strength can be attributed to the reloading of positions that were reduced prior to the release.  EURUSD has not made a new low and neither USDCAD nor USDJPY have made new highs, suggesting further range consolidation is likely.

Sinking oil prices are the major barrier to Canadian dollar gains and there doesn’t appear to be any relief in sight. Saudi Arabia decreased the price hike for Asian users, according to Reuters.  The risk of further oil price weakness will limit USDCAD losses.

Technical Outlook

The short term USDCAD technicals are bullish while trading above 1.3030, an uptrend line that has been intact since June 22. However, there is minor intraday resistance in the 1.3170-1.3200 area which has capped USD gains all week. A break would extend rallies to 1.3280 while a failure implies further 1.3030-1.3200 consolidation.

Today’s Range 1.3110-1.3200

Chart: USDCAD 1 hour with possible consolidation range shown.