USDCAD Overnight Range 1.3070-1.3205
A risk aversion breeze has chilled FX markets in a busy overnight session. The US dollar has climbed against all the G10 currencies except for the Swiss Franc and the Japanese Yen. At least that has been the case in Asia and in Europe this morning. The Japanese Nikkei dropped 2.42% and USDJPY dropped, in part due to bearish technicals while ignoring half-hearted verbal intervention attempts by politicians.
The Reserve Bank of Australia left interest rates unchanged and the statement’s verbal intervention left a lot to be desired, which some see as evidence that last month’s G20 meeting participants agreed to stop devaluing their currencies.
EURUSD dropped in Europe with some believing that the hawkish comments from Chicago Fed President, Charles Evans and Boston Fed President Eric Rosengren contributed to the move. Both men have been advocating for rate hikes sooner rather than later. Eurozone data (Services PMI 53.1 vs previous 54.0 and Feb. Retail sales, 0.2% vs forecast 0.0%) had little impact.
GBPUSD remained heavy on Brexit concerns and ignored a better than expected Services PMI.
USDCAD was bid when New York started the day and it has continued that way all morning. A weaker-than expected Merchandise Trade report (Trade Deficit -$1.92 billion vs. forecast -$1.0 billion) caused USDCAD to accelerate through resistance at 1.3160 and drive to 1.3205 before pulling back slightly
In addition to the general US dollar strength, the recent slide in WTI prices hasn’t done the Loonie any favours. WTI touched $35.22 in Europe before recovering slightly to $35.22. Bank of Canada, Deputy Governor, Carolyn Wilkins speaks at 1600 GMT and may provide the Loonie with some much needed support if she parrots the rosy economic outlook presented by Stephen Poloz last month.
USDCAD technical outlook
The intraday USDCAD technicals are bullish while trading above 1.3100 supported by the break of 1.3160. A break above the 1.3200-20 resistance area will extend gains to 1.3290 and then 1.3400. A move below 1.3100 would negate the uptrend and put the focus back on 1.2850. For today, USDCAD support is at 1.3160, 1.3130 and 1.3100. Resistance is at 1.3205-1.3220 area and 1.3280
Today’s Range 1.3160-1.3220
Chart: USDCAD 1 hour
