USDCAD Range 1.2962-13043
Modestly strong US data (Retail Sales and Jobless Claims) and soothing statements from the Peoples Bank of China (PBoC) served as Prozac for anxious traders worried about a China led collapse in the global economy. The rise in Retail Sales from 0.5% to 0.6% in July propelled the US dollar to healthy gains against the G-7 currencies.
The dollar recovery started in Asia following a PBoC press conference. The PBoC denied rumours that they planned to devalue the yuan by 10%, reiterating that the rate adjustment was merely a move to address an imbalance between the reference rate and the market rate. They said that the adjustment is almost completed.
WTI oil prices continue to decline, hurt by a forecast from the International Energy Agency predicting a continued oil glut throughout 2016. The lack of a material drop in shale production and a refinery operational issue in the US mid-West, are straining storage capacity in Cushing, Oklahoma. The weak oil prices have reinforced the USDCAD floor in the 1.2940-50 area and are setting the stage for another move to 1.3200.
The intraday technicals are bullish while trading above 1.2980 with this morning’s move above 1.3030 suggesting that a short term base is in place in the 1.2940-50 area. A decisive break above 1.3060 will extend gains to 1.3120. Longer term, the failure to break below 1.2940 yesterday suggests further 1.2940-1.3210 trading ahead.
Today’s Range 1.3010-80
Chart: USDCAD 4 hour with uptrend shown