USDCAD Overnight Range 1.2784-1.2896      

The US dollar was just starting to feel frisky, grinding gains against the majors when the party was spoiled by weaker than expected inflation data.  March CPI and Core CPI rose 0.1% vs the forecast for 0.2% gain which probably slams the door on an April rate hike and reduces the odds of a June move as well. The soft CPI data overshadowed a strong Jobless Claims report.

Yesterday’s post-BoC meeting USDCAD rally continued unabated in Asia until touching 1.2896 in early European trading. It dropped back to 1.2784 after the US data but has recovered slightly.  The BoC delivered another muddled message, unsure of whether to highlight the positives or negatives to their outlook, so instead focused on both.

It was a lively session in Asia. AUDUSD rallied on better-than-expected jobs data (Actual 26.1k vs. forecast 17.0) and held on to most of the gains despite the bulk of the job gains being part-time. The Monetary Authority of Singapore (MAS) threw markets for a loop when they announced a change in the policy band for USDSGD due to a “less favourable external environment”.

USDJPY snapped its winning streak in early European trading but the drop was shallow and USDJPY remains at 109.25.  GBPUSD got spanked in Asia on Brexit polls but recovered in Europe as traders waited for the Bank of England interest rate decision. The BoE left rates unchanged (as expected) and expressed concern over Brexit issues.

Oil traders are a tad nervous ahead of the weekend Opec meeting in Doha, Qatar but not so nervous as to unwind recent long positions.  WTI is trading at $41.86/b despite the large build in US crude stocks reported on Monday and Opec’s own report of a decline in demand in 2016.

There is a lot of China data due tonight which, if weaker than expected, could spark another bout of risk aversion trading.  USDCAD direction will be governed by WTI moves and general US dollar sentiment.

USDCAD technical outlook

The intraday USDCAD technicals are bullish following the break of the April downtrend at 1.2805 and further supported by the move above 1.2830. That break suggests another run to the 1.2895-1.2910 zone. A move below 1.2830 will lead to 1.2790 and then 1.2740. The short term downtrend remains intact while trading below 1.3030. For today, USDCAD support is at 1.2830, 1.2780 and 1.2740.  Resistance is at 1.2890, 1.2910 and 1.2960

Today’s Range 1.2780-1.2860

Chart: USDCAD daily