USDCAD Range 1.1.3206-1.3255  

US CPI was in line with expectations but a tad on the soft side. (Headline August -0.1% vs. Forecast 0.0%, ex-food and energy 0.1% vs. forecast 0.1%). The initial reaction was to sell US dollars as this data isn’t really supportive of a Fed rate hike. At the same time, it wasn’t unexpected, so it shouldn’t be a factor. The FX moves are just due to jittery traders in a thin market.

It was another lackluster overnight FX session.  The action that did occur took place in London.  Better than expected UK employment data (45k May/July) which included a bump in Average Earnings boosted GBPUSD to 1.5434 from 1.5345. It has added to the gains following the US CPI data and is now trading at 1.5465.  WTI eased higher which has continued during the New York session.

A sudden rally in the Shanghai Composite Exchange (SHCOMP) in the last hour of trading (rumoured official intervention) let it close with a 4.9% gain on the day.  That set the tone for European equity indices which are all in the green, at the moment, albeit on sharply lower volumes. That trend has also continued in New York with the DJIA, and S&P 500 all positing gains.

At the risk of sounding like a broken record, USDCADS will be confined to a 1.3180-1.3280 trading band until 2:00 pm (11:00 am PST) on Thursday. At the point in time traders be either worrying about the rate increase that just happened or the rate increase still to come.

Technical Outlook

USDCAD is in a minor downtrend while trading below 1.3260 but needs to break support at 1.3180 to avoid additional 1.3180-1.3280 consolidation.  A break either side of the range will garner an additional .0100 points.

Today’s Range 1.3170-1.3250

Chart: USDCAD 30 minute