USDCAD Overnight Range 1.2839-1.2950      

FX markets started the New York session with a modestly bullish US dollar bias.  The view was rewarded when the April CPI data came in slightly better than expected. April CPI rose 0.4% vs forecast 0.3%, m/m while Core CPI was 0.2% as predicted. Today’s data, combined with Friday’s strong Retail Sales data and the gain in the Michigan Consumer Confidence report, should keep the hawkish camp happy.

USDCAD went on another oil-slicked ride overnight. WTI spiked to $48.30 in Asia aided in part, by reports that the Fort McMurray oilsand camps had to evacuated, again. The on-going bullish sentiment from a reduction in production and the Goldman Sachs report, didn’t hurt. USDCAD fell from 1.2910 to 1.2834 in Asia and then recouped all of those losses, and then some, in Europe, touching 1.2924 where it opened in Toronto. This mornings Canadian Manufacturing Shipments beat expectations which is not really that impressive.  Instead of being really weak (Forecast -2.0%) they were just weak (Actual -0.8%).

AUDUSD and GBPUSD stole the show in Asia.  AUDUSD rallied when the RBA minutes were found to be less doveish than expected as the rate cut was a close-call. AUDUSD spiked to 0.7365 from 0.7280 but gave back half of those gains in the European session.  GBPUSD spiked on Brexit poll results indicating that the “Stay” side was garnering additional support. GBPUSD rallied from 1.4390 to 1.4523 before retreating to 1.4485 in Europe on mixed to weak UK data, including lower-than expected CPI EURUSD traded sideways in a 1.1310-1.1340 band.

Steady to firm oil prices will act as a drag on USDCAD gains on today’s data.

USDCAD technical outlook

The intraday USDCAD technicals are bullish following the overnight break of the minor downtrend line from Monday, at 1.2892 which is looking for a break of resistance in the 1.2925-35 area to extend gains to 1.2970. If broken, a retest of the May 9 peak of 1.3014 is likely. However, USDCAD is trapped within a 1.2770-1.3014 trading band since May 4.  A break either side of this range would likely result in a 0.0150-point move.

Today’s Range 1.2890-1.2960

Chart: USDCAD hourly