USDCAD Overnight Range 1.4070-1.4167        

The noodles hit the fan in Asia, specifically China. USDCNY fixed higher-than-expected for the second day in a row leading to whispers of devaluation. Within 30 minutes, the 5 and 7% circuit breakers tripped and China’s equity markets closed for the day.

That kicked risk aversion sentiment into high gear.  USDJPY tanked, USDCHF rallied and the antipodeans were sold. However, EURUSD was and it managed to climb from 1.0770 to 1.0870.  Global equity indices felt the pain as well with all markets posting large losses.

Oil dropped on the China turmoil falling from $34.26 to $32.10 before bouncing back to $32.91.  That was enough for USDCAD to push above 1.4100 and continue to climb.

This mornings speech by Bank of Canada governor, Stephen Poloz, was seen by some as fairly optimistic as he was championing a bit of a recovery in H2 2016. USDCAD has dropped from 1.4167 and is currently trading at 1.4085.  that move may be more due to expectations that WTI prices are near a floor and due to bounce, rather than Mr. Poloz’s speech.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.4050 supported by the break of resistance at 1.4100.  There may be a bit of resistance at 1.4190 which halted rallies in 2003. If broken, the next resistance is in the 1.4265-1.4285 area. A break below 1.4050 would extend losses to 1.3970 and then 1.3940.  for today, USDCAD support is at 1.4105, 1.4050 and 1.4010.  Resistance is at 1.4185, 1.4230 and 1.4280

Forecasted Range 1.4060-1.4150

Chart USDCAD Daily 2003 showing resistance area