USDCAD   Overnight Range 1.2926-1.2965    

FX markets were relatively quiet overnight.  Positions have been adjusted, bets have been made and traders are now awaiting the FOMC statement. Will the FOMC give a hint of a rate hike in September and thus kick off a flurry of dollar buying? Or will the Committee provide the usual blather which provides no information at all. The Fed is torn between not wanting to provide forward guidance and not wanting to surprise markets.  Unfortunately, someone will always be surprised.

The overnight FX markets were a tad less than inspiring. The majors are starting the New York morning at, or close to, the levels they were trading at on Wednesday’s NY close.  Kiwi exploded higher at the end of the day and in early Asian trading on relatively hawkish comments from the RBNZ governor. Further RBNZ interest rate cuts are not as cut and dried as previously thought. Chinese equity markets were actually in the green by the close of business avoiding one day of global contagion fears.

Today’s US Pending Home Sales data could give the US dollar a bit of support. USDCAD traders will be watching WTI prices and the EIA Crude stocks report due at 10:30 am EDT. However, the elephant in the room is the FOMC meeting and trading activity will just be noise until the statement is released

Technical Outlook

USDCAD technical outlook

The intraday technicals are bearish while trading below 1.2990.  The break below additional support at 1.2950 led to a low of 1.2915, just above trendline and multi-bottom support in the 1.2880-1.2910 zone. A break of this area would lead to a free-fall to 1.2750 and essentially fill the gap created between 1.2750 and 1.2900 when the BoC cut rates. At the moment, the uptrend line from mid-June remains intact.

Today’s Range 1.2930-1.3030

 Chart: USDCAD hourly with intraday downtrend and support