Overnight Range 1.2976-1.3026                  

USDCAD held on to Friday’s gains following what was deemed to be “hawkish” comments from Fed Chair, Janet Yellen.  Sure, she said that she believed that the case for an increase in rates had strengthened but she also made similar remarks in her June 6, Philadelphia speech. After that speech, many analysts and traders were convinced that US rates would be increased June 15.  Didn’t happen.  Why should this time be any different?

Various Fed speakers have repeatedly said that they are cautious and watching the data which suggests that Friday’s US nonfarm payrolls number may have a bigger impact than usual.

Overnight, the US dollar was bid in fairly subdued trading due the UK Summer Bank Holiday which sucked a lot of liquidity out of the market. Cleveland Fed President, Loretta Mester (a well-known hawk) added her voice to the rate hike camp. Bank of Japan governor Kuroda reminded markets that the BoJ would “decisively act” with more easing if needed.

Oil prices were a tad softer. A report that Iraq would increase supply and the firm US dollar were behind the move.

Aside from today, this week’s FX markets should be a lot livelier than has been the case for the past few weeks because of month end rebalancing flows on Wednesday, NFP on Friday and the G20 meeting in China on the weekend.

Today’s US Personal Income and Consumption data was as expected and did nothing to dissuade rate hike hawks. There is no Canadian data.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.2930 supported by the break above resistance in the 1.2970-90 area.  That move suggests further gains to the 1.3060-80 area.  A break of the topside would put 1.3240-60 in play.  Longer term, USDCAD remains trapped within a 1.2650-1.3250 trading band and 1.3000 is merely the middle of that range.

For today, USDCAD support is at 1.2980, 1.2960 and 1.2910.  Resistance is at 1.3030 and 1.3080.

Today’s Range 1.2980-1.3060

Chart: USDCAD hourly