USDCAD Range 1.3148-1.3296
The world didn’t end after all. Yesterday’s financial market madness is today’s sober second thought. The debate is still raging but market price action appears to suggest the moves were a much needed correction of positions that had become excessively one-way. In currencies, that would be EUR and JPY. Both of those pairs have stabilized.
The Chinese equity market price collapse kicked off this week’s global financial panic so it was only fitting that Chinese authority’s stepped up to the plate to help alleviate concerns. In a better-late-than-never move, the Peoples Bank of China (PBoC) cut the Reserve Requirement (RR) by 50bps and the 1 year benchmark lending rate by 25 bps to 4.69% early this morning. S&P futures have rallied on the news and the Dow Jones Industrial Average jumped 320 points at the open.
Yesterday’s market volatility managed to reduce the odds of a September rate hike by the Fed and today’s disappointing US data probably reinforced that view. The FHFA House Price Index printed 0.2% vs forecast of 0.4%
USDCAD has been trading exceedingly choppily since New York walked in, tracking WTI price movements almost tick for tick. The outlook for WTI prices is negative which will limit any Canadian dollar gains.
The intraday technicals are bullish while trading above 1.3050 looking for a retest of the overnight peak at 1.3296 and then 1.3450. A move below 1.3040 would suggest that a short term high is in place and target 1.2950. For today, USDCAD support is at 1.3150, 1.3120 and 1.3080. Resistance is at 1.3220, 1.3260 and 1.3310
Today’s Range 1.3170-1.3270
Chart: USDCAD and WTI 10 minute chart showing tick for tick price movement