USDCAD Overnight Range 1.3716-1.3840

USDCAD has been in demand ever since touching 1.3660, yesterday.  The steady rise overnight kicked into high gear with this morning’s release of weaker-than-expected Retail Sales data.  The 2.2% decline in December, which followed a 1.6% increase in November, wasn’t entirely unexpected as it was due to a combination of low gasoline prices and payback from the strong November report.  Nevertheless, the data highlights the sluggishness of the Canadian economy.

US CPI data was released at the same time. The 2.2% gain, ex food and energy for January, plus modestly better PPI and jobless claims this week, will provide support for those expecting a more hawkish sounding Fed in March.

It was a modestly risk-averse Asia session. Softer commodity prices contributed to the move as did weaker Asia equity indices. A Reserve Bank of Australia board member said to the Wall Street Journal that “the Australian dollar was too high” and that he would “be more comfortable with AUDUSD trading around .6500”.  The comments had only a minimal impact.

The European session was relatively calm.  Equity indices were all slightly lower, likely due to end of the week profit-taking.  The British are skittish as they await the response of the EU summit to Britain’s reform proposals.  So far, nothing. GBPUSD mostly flat-lined but with a negative bias.  There was a blip of activity after posting a topside surprise in Retail Sales. (Actual 2.3%, ex-autos vs. forecast 0.7%) So far, no deal.  Meanwhile EURUSD is near key technical support in the 1.1030-50 area.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.3750 looking to extend gains above 1.3840 to set up a retest of 1.4000.  Failure to crack 1.3840 will lead to a pull back to 1.3780. A break below this level will lead to 1.3710 and then 1.3650.

At the same time, the 1.3650-1.4000 range has contained USDCAD all week and needs to break.  For today, USDCAD support is at 1.3780 and 1.3730.  Resistance is at 1.3840, 1.3880 and 1.3930.

Forecast Range for the day 1.3780-1.3880

Chart USDCAD 1 hour