USDCAD Overnight Range 1.2620-1.2765  

It had to happen. It was only a matter of time. Someone decided to sell some US dollars and like a germ-laden sneeze in a crowded subway, a large number of people were infected with the same idea. Yesterday’s US dollar gains are today’s losses, and across the board, in a nasty move.The USD pressure continued as New York walked in and the dollar dropped further on a weak Retail Sales number. Lousy weather gets the blame for the miss allowing the dollar to bounce from its lows. Jobless claims, beat expectations, also helping the cause.

Patient zero could have been the Loonie. The USDCAD rally which stopped just short of 1.2800 yesterday, (evidence of an option barrier defence) started dropping and then picked up steam in Asia. A hawkish RBNZ statement caught Kiwi traders short and NZDUSD soared. A slightly better Aussie employment report didn’t have quite the same effect on AUDUSD but it managed to rally during the European session. The Nikkei was over 19,000, a level not seen in 15 years helping JPY rally. The EURUSD rally was orderly but steep, trading from 1.0495 to 1.0690 where it peaked.  It’s now 1.0615.

USDCAD has wreaked havoc on intraday long dollar positions as their stops were triggered. Oil price softness combined with more IMF warnings about Canadian debt levels in the face of the bullish US dollar outlook continues to suggest that in the short term, Canadian dollar gains are limited to 1.2580-1.2620.

USDCAD technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.2690 but unless there is a decisive break below the 1.2580-1.2620 area today’s USDCAD sell-off is merely a correction of the rally from March 6. For today, USDCAD support is at 1.2620 and 1.2580.  Resistance is at 1.2660, 1.2690 and 1.2710.