USDCAD Overnight Range 1.4543-1.4658  

USDCAD soared overnight, fueled by another plunge in oil prices, anticipation of a Bank of Canada rate cut today and general commodity currency malaise. However, since stalling out at 1.4688, USDCAD has drifted lower with a little help from better than expected Manufacturing Shipments and Wholesale Sales data. It helped that US data (Housing Starts and core CPI) were slightly weaker as well, which undermined the US dollar.

In Asia, Kiwi was already heavy following the earlier poor GlobalDairyTrade auction when Q4 CPI printed a 16 year low of 0.1%y/y. NZDUSD got whacked as did AUDUSD on soft consumer confidence data. However, USDJPY was the big story which followed the Nikkei lower and touched 115.96.

Europe traders consolidated the Asian FX losses.  GBPUSD ignored better than expected unemployment data and remained soft.  EURUSD failed on a push at 1.0950 and quickly dropped back to the 1.0900 level.

The big event for USDCAD traders is the BoC rate decision at 10:00 am. A Bloomberg survey showed 16 out of 34 economists predicting a 0.25% rate cut. Lately, there have been a lot of press reports suggesting that the BoC stand pat as the weak Loonie is hurting consumers. However, the landscape today is probably a tad worse than it was last year on January 21, when Mr. Poloz cited low oil as a key reason to cut rates.

The rest of the G-10 currencies will take their trading cues from equity market direction and oil prices

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.4610 looking or a retest of the overnight high and then additional gains to 1.4750 with 1.5000 easily within reach if the BoC cuts rates. The relentless USDCAD rally is overdue for correction which may be signaled on the loss of support at 1.4560.

Forecasted Range Scenarios: if BoC cuts rates: 1.4600-1.4800; if BoC unchanged 1.4460-1.4660

Chart USDCAD weekly from 2001 to present