Overnight Range 1.3279-1.3360              

USDCAD traded with a firm bias in a quiet overnight session, underpinned by WTI oil pices sliding below $50.00/barrel.

Asia FX trading was subdued, at least for USDJPY which was trapped within a 104.00-104.35 range and one that held until the New York open.

The Australian dollar was the life of the party.  A 0.7% rise in Q3 CPI (forecast 0.4%) sent AUDUSD to 0.7708 from 0.7626.  The firmer than expected inflation data diminished the risk of a rate cut next month.

Initial weakness in NZDUSD gave way to strength on general US dollar weakness vs. the majors.

EURUSD drifted higher throughout the evening for no apparent reason. GBPUSD was rangebound and managed to grind higher in lockstep with the weaker US dollar profile. This mornings European data was not a factor.

WTI oil prices never recovered from Tuesday’s end of day plunge.  The API Crude stocks change report showed a build of 4.8 million barrels, erasing the previous week’s decline.   In addition, Iraq has added its name to the oil production cap exemption roll, raising questions about the effectiveness of a cap.

Asia equity indices were mostly lower with the exception of the Nikeei which squeaked out a tiny gain.  European bourses were all lower and New York futures point to a lower opening.

USDCAD sentiment is bullish .Expectations for soft economic data, a doveish central bank and the prospect of the Fed raising rates  have combined to target 1.3550.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.3320 looking for a break of resistance in the 1.3395-1.3420 area to extend gains to 1.3550. A break below 1.3320 risks a visit back to the 1.3240-50 area.  If this level breaks it would argue for additional 1.3100-1.3400 consolidation.

For today, USDCAD support is at 1.3320 and 1.3280. Resistance is at 1.3390 and 1.3Today’s Range 1.3320-1.3420

Chart; USDCAD 4 hour

26oct-2016