Overnight Range 1.3377-14.3417
USDCAD plowed through yesterday’s 6 month high of 1.3405 and touched 1.3417, so far. US GDP beat the forecasts. Q3 advance GDP rose 2.9% vs forecast of 2.5%. The employment cost index was as expected at 0.6%. However, the gains were not sustained.
Overnight, FX trading confined itself to narrow ranges.
AUDUSD rallied, retreated and then rallied again, all within a tight 0.75600-0.7608 range. Australia PPI and New Home Sales data were mixed and not much of a trading factor.
NZDUSD continued the New York rally but the move stalled at 0.7145. The prospect of an RBNZ rate cut and a the possibility of a strong US GDP report weighed on the currency.
USDJPY touched 105.46, a level last seen in July, on the knee-jerk reaction following the US GDP data release. It has since retreated but remains bid due to rising expectations of a US rate increase and rising yields.
Sterling traded sideways in Asia and then dropped to 1.2121 from 1.2186 on a headline that a Northern Ireland court rejected a Brexit trigger challenge. Essentially, the law of the province does not restrict UK Prime Minister May’s ability to trigger an exit from the European Union.
EURUSD is the currency that traders forgot. It dirfted within a 1.0898-1.0924 range and then popped to 109.35 after the GDP data. It is currently hovering just above 1.0900.
Oil prices moved sideway’s albeit with a modestly negative bias. There is a “technical” Opec meeting in Russia that started today, to discuss details of the production cap agreement. Traders are skepticle as to the success of anyt agreement.
USDCAD traded in a very tight band but with a bullish bias. The prospect of a US rate hike combined with a more doveish Bank of Canada and the risk of an oil price decline keeps the focus on 1.3550.
The table is set for additional US dollar gains if the Reuters/Michigan Consumer Sentiment index beats the forecasts and comes in well above 88.1. That and today’s strong GDP data would increase expectations that next Wednesday’s FOMC statement will all but confirm a rate hike in December. Monday is month end so we could see additional FX volatility today on early portfolio rebalancing flows.
USDCAD technical outlook.
The intraday USDCAD technicals are bullish. The uptrend from the September low remains intact while prices are above 1.3140. Today’s break of 1.3405 targets the 1.3550-75 area. A move below 1.3240 would extend losses to 1.3160. For today, USDCAD support is at 1.3340, 1.3300 and 1.3250. Resistance is at 1.3450 and 1.3480
Today’s Range 1.3360-1.3440
Chart: USDCAD hourly