USDCAD Overnight Range 1.3020-1.3128      

USDCAD has been climbing steadily since touching 1.3020 in Asia.  Yesterday’s oil market rally due to declines in US Crude inventories has ben side-swiped by news that Iranian exports have risen sharply.  Short term oil market concerns have trumped the “dollar soft on doveish Fed” story. WTI dropped back from $38.20 to $37.39/barrel and is currently at $37.50/b. This mornings US jobless claims data (Actual 267,000 vs. forecast 270,000) didn’t have any FX impact.

In Asia, USDJPY was the story and it wasn’t a good story for USDJPY bulls. The FOMC minutes said to many that the “doves” were in charge and that sentiment, combined with the rebound in oil prices and PM Abe’s cryptic “competitive currency devaluation” comments drove USDJPY through key support at 108.50. The technicals now target 105.00. Traders also ignored comments from the BoJ governor and veiled threats by the Ministry of Finance.

EURUSD spiked through resistance at 1.1400 around the London open and touched 1.1455. Then it promptly reversed course and tested support at 1.1350 before bouncing back to 1.1400.  There wasn’t any particular reason for either move. GBPUSD tried higher in early London trading but fell back after failing to break resistance at 1.4150.

USDCAD trading will remain at the mercy of US dollar direction vs. the majors. The prospect of a “doveish fed for longer” and firm oil prices will keep the focus on the downside.

USDCAD technical outlook

USDCAD is in a downtrend while trading below 1.3280 looking for another test of major support in the 1.2820-50 area. Currently the very steep (and very minor) uptrend from the overnight low comes in around the 1.3060-70 area. A move below this level targets a retest of the 1.3000 support zone. Only a decisive break above 1.3280 would negate the downward pressure.  For today, USDCAD support is at 1.3060, 1.3005 and 1.2970.  Resistance is at 1.3130 and 1.3160.

Today’s Range 1.3060-1.3130