USDCAD Overnight Range 1.2175-1.2235      

USDCAD drifted higher in early New York trading although the move lacked urgency or conviction and it stalled just ahead of the downtrend line at 1.2240. US Jobless Claims were a tad higher than forecast but the underlying trend is supportive.

The Asian session was quiet. The release of the FOMC minutes yesterday afternoon failed to provide any inspiration to traders and the US dollar gave back prior gains. Even weaker than expected China Manufacturing PMI (Actual 49.1 vs. Forecast 49.3) didn’t spark much trading activity.The Bank of Japan is rumoured to be upgrading its assessment of the economy on Friday but since no change in monetary policy is expected, the currency should be unaffected.

Sterling was the story in Europe. A strong Retail Sales report (Actual 4.7% vs Forecast 3.8, y/y) squeezed GBPUSD shorts and the pair jumped from 1.5530 to 1.5675.

Friday morning brings Canadian Retail Sales and CPI data, both of which are expected to be soft which sets the bar low for an upward surprise.

USDCAD technical outlook

The USDCAD downtrend from the end of March remains intact while trading below 1.2240 with a break of 1.2160 pointing to further losses to 1.2080. A break above the 1.2240-60 area would lead to a test of the 1.2340-60 area. For today, USDCAD support is at 1.2190, 1.2160 and 1.2120.  Resistance is at 1.2220-, 1.2240 and 1.2270.

Today’s Range 1.2170-1.2240

Chart: USDCAD 4 hour with downtrend highlighted