USDCAD has shrugged off Friday’s decline and rallied above the overnight high supported by a widening of US and Canada interest rate differentials and a drop in oil prices from their overnight high. Canada housing starts were 214,500, a small miss from the 217,500 forecast

Emmanuel Macron is the President of France, soundly trouncing his anti-euro, opponent Marine Le Pen.  The outcome was not a surprise yet EURUSD gapped higher at the Asia open leaping from Friday’s New York close of 1.0995 to 1.1021.  The gap was quickly filled and EURUSD declined steadily to 1.0958.  It bounced back to 1.0995 by the European opening and then reversed course again, opening in New York at 1.0945 in what appears to be a profit taking move.

Overnight Ranges

USDCAD 1.3654 1.3670 1.3680 1.3645
EURUSD 1.0985 1.0937 1.1021 1.0935
USDJPY 112.54 112.52 113.11 112.47
GBPUSD 1.2975 1.2968 1.2987 1.2950
USDCHF 0.9872 0.9941 0.9939 0.9896
AUDUSD 0.7420 0.7409 0.7423 0.7388
NZDUSD 0.6918 0.6936 0.6943 0.6890
USDMXN 18.9013 18.9510 18.9844 18.9094
WTI   46.30 46.28 46.95 46.01

Hawkish comments from Cleveland Fed President Loretta Mester suggesting that the Fed should hike rates and normalize its balance sheet, may have helped the move.

Overnight, Japan returned after a five-day break.  USDJPY gapped from the New York closing rate of 112.58 to 113.11 in another short-lived moved. The steady decline continued during the European session and it opened in New York where it close.

China posted a larger than expected $38.05 billion (y/y) April trade surplus.  It didn’t help Aussie much, but Kiwi got a lift, rising from 0.6890 to 0.6943.

AUDUSD opened at 0.7423 and slide steadily, undermined by weak iron ore prices. Better than expected NAB business confidence data was offset by soft building permits data.

Oil prices extended Friday’s rally, climbing from a closing level of $46.30 to $46.95/barrel in early trading, only to retreat down to $46.01/b. Russia and Saudi Arabia released statements about an hour apart suggesting that both nations were open to extending production cuts to the end of 2017 which may have limited the downside.

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish following Friday’s “key reversal” day.  (a key reversal day is defined as a day when prices open higher than previous day’s close, make a new high and then close below the prior day’s low) USDCAD is in a downtrend while prices are below  1.3740. A break below key support in the 1.3630-40 area will extend losses to 1.3570.  If that level breaks, it could lead down to 1.3440, the 61.8% Fibonacci retracement of the April-May range. A break above 1.3740 shifts the focus back to 1.3850.  For today, USDCAD support is at 1.3640 and 1.3610.  Resistance is at 1.3740 and 1.3790

Today’s Range 1.3640-1.3740

Chart:  USDCAD weekly