USDCAD Overnight Range 1.3884-1.4011    

Janet Yellen’s second day of testimony, this time to the Senate Banking Committee wasn’t much different from her remarks on Wednesday. And the result was similar; commodity currencies soft and risk aversion currencies higher. This mornings US Jobless Claims data and Canadian housing starts were in line with forecasts and therefore a non-factor for traders. US equity markets have followed the overseas markets lower.

Overnight trading was chaotic. The US dollar dropped against the yen, Swiss and euro while scratching out gains against the commodity currency bloc.  GBPUSD dropped due to on-going “Brexit” fears. The free-falling wasn’t confined to currencies; global equity markets sank as did oil prices.  Reportedly, FX volumes were very high despite holiday’s in China and Japan.  Liquidity was poor which may have exaggerated some of the moves.

Janet Yellen’s testimony to Congress, yesterday failed to alleviate concerns.  If anything, she made them worse.  Her message was that the FOMC was concerned with risks to growth and inflation and concern over global economies, but gave no indication that rate hikes were off the table. She has another go today before the Senate Banking committee.

Sweden’s Riksbank gave traders another surprise and cut its benchmark rate to negative 0.50% blaming low inflation for the move.

Oil prices continued to slide. Yesterday’s talk of Russia and Opec making nice to discuss production cuts looks a tad dubious.  Iran has reportedly undercut the price of crude for the Mediterranean in a bid for market share. That isn’t very nice.  WTI has traded in a $26.32-$27.47 range and currently sits at $26.55/b.

The USDCAD rally on the falling oil prices was curtailed by the US dollar weakness vs. the majors and resistance in the 1.4000-20 area.

USDCAD technical outlook

The intraday USDCAD technicals are bullish following the break above 1.3830 yesterday with the move above resistance at 1.3870 supporting the bullish stance. There is a modest uptrend intact above 1.3910.  Resistance in the 1.4000-20 area is guarding additional resistance at 1.4037 representing the 38.2% Fibonacci retracement of the January-February range.  For today, USDCAD support is at 1.3940, 1.39100 and 1.3880.  Resistance is at 1.4010 and 1.4060.

Forecast Range for the day 1.3930-1.4020

CAD 11 FEB