It may not be the greatest love story ever told. Nevertheless, the Canadian dollar and oil prices are strolling hand-in-hand.

Yesterday, European traders started selling USDCAD after the latest rally stalled at 1.2992.  Prices dropped through support at 1.2940 about the same time WTI oil prices pushed above $71.75/barrel.  Selling pressure intensified in Toronto, triggering stop-losses and prices crashed through support at 1.2880, touching 1.2820 before rebounding to close at 1.2856.

Overnight, USDCAD traded heavily in Asia and then plunged to 1.2776 in Europe after Israel and Iran (via Syria) exchanged missiles.  WTI oil prices rallied to $71.86/b.

Chart : USDCAD & WTI Oil 

 Source : Saxo Bank

In Asia, the Reserve Bank of New Zealand delivered a crystal-clear message about interest rates.  They aren’t going anywhere.  The RBNZ wrote  “The Official Cash Rate (OCR) will remain at 1.75 percent for some time to come. The direction of our next move is equally balanced, up or down. Only time and events will tell”.  NZDUSD tanked on the news , falling from 0.6982 to 0.6904 before bouncing into the New York open.  AUDUSD drifted quietly higher.

USDJPY was uneventful.  Prices drifted within a 109.62-110.00 range with the top-side capped by the failure of US 10-year Treasury yields to break above 3.0%.

Many European nations are closed today for Ascension Day, which put a damper on FX trading.  So did the wait for  UK “Super Thursday” news.

UK economic reports were slightly positive.  March Manufacturing Production rose 2.9 %, y/y, as expected.   Industrial Production was unchanged, but the Trade deficit widened.  GBPUSD has rallied on the news, rising from 1.3524 to 1.3616. Prices plunged to 1.3512 after the Bank of England left rates unchanged, and trimmed CPI forecasts.

EURUSD consolidated yesterdays moves and is trading near the top of its overnight 1.1844-1.1889 range

US CPI (forecast 0.2%, m/m) is the major US data today.  Various Fed speakers have attempted to downplay the immediate impact of a high number, stating that the FOMC would consider letting inflation run above target for a “little” while.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while prices are below 1.2820.  Yesterday’s break below 1.2870 snapped the uptrend line from April 17, with the loss of support at 1.2805 suggesting a short term top is in place at 1.2995.  A move below 1.2740 opens the door to 1.2660.  For today, USDCAD support is at 1.2770 and 1.2740.   Resistance is at 1.2805 and 1.2820

Today’s Range 1.2740-1.2820