USDCAD Overnight Range (including Monday) 1.2008-1.2215      

USDCAD was in demand on Monday and the demand became a stampede by Tuesday, fueled by a broad based US dollar rally, stop-loss buying, and a strong US housing report this morning. (Housing Starts, Actual 1,135K vs forecast of 1,015k)  The San Francisco Fed may have encouraged dollar bulls yesterday when they released a report suggesting that US economic growth may be substantially higher than reported. That report, combined with this morning’s news out of Europe that the ECB would front load QE purchases in May and June to compensate for lower volumes in the summer months drove EURUSD lower, from 1.1448 to 1.1130 so far today.

In Asia, AUDUSD dropped following the RBA minutes which provided scope for further rate cuts due to the slowdown in China and weak capital expenditures.  At the same time NZDUSD popped when the RBNZ tweaked inflation forecasts upwards. GBPUSD traded lower on the back of a weak EUR and poor inflation data.

The key risk to the Canadian dollar today stems from a speech by BoC Governor, Stephen Poloz, in Charlottetown.

USDCAD technical outlook

The intraday USDCAD technicals are bullish above 1.2150 looking for a break of resistance in the 1.2190-1.2220 area to extend gains to 1.2260 and then 1.2320. However, 1.2220 zone represents strong resistance which has thwarted attempts higher since April 23. If this level breaks, it argues that a short term bottom is in place at 1.1950 and would target 1.2360.  For today, USD support is at 1.2150, 1.2120 and 1.2070. Resistance is at 1.2190, 1.2220 and 1.2260.

Today’s Range 1.2160-1.2220

Chart: USDCAD 4 hour with uptrend and resistance noted