USDCAD Range 1.3203-1.3310

USDCAD was bid to start the week and it has accelerated since New York opened, ignoring a reasonably firm WTI price.Disappointment over a weaker Current Account report didn’t help but the real driver of the move is US dollar demand for month end portfolio rebalancing.  Once this flow is out of the way (1600 GMT or 8:00 am PDT), USDCAD should retreat back toward 1.3240.

On Friday, some FX traders kicked off their weekends anticipating that the Fed vice chair, Stanley Fischer, would use his speech at Jackson Hole to slam the door on any chances of a September rate hike. He didn’t.  However, his remarks were of the “clear as mud” variety, leading some to conclude that a September hike was still on the table.

The other major story was courtesy of the Financial Times. They reported that China had shelved large scale equity purchases in favour of chasing down “manipulators”. That policy will end badly for both the SHCOMP and short sellers.

Looking ahead, USDCAD appears likely to test key resistance in the 1.3450 area if Tuesday’s GDP report and Friday’s employment report are worse-than-expected. Buy USDCAD on dips.

Technical Outlook

The intraday technicals are bullish following the break of 1.3280, looking for another test of the 2015 high at 1.3350 on the day.   A decisive move above 1.3350 targets 1.3410 and 1.3450.  A move below 1.3280 will lead to 1.3210.

Today’s Range 1.3250-1.3350

Chart: USDCAD 1 hour with support and resistance show