USDCAD Range 1.3180-1.3270
FX markets remain skittish a few hours after New York traders walked in. Oil prices are trading heavy, US stock futures are soft and there aren’t any US data releases to put a bridge over troubled waters. That should keep USDCAD pointing higher for the balance of the day. So much for a sleepy Monday morning.
It was a panic driven overnight market. USDCAD smashed through resistance in the 1.3200-10 area and continued to climb, finally running out of gas at 1.3270. The Shanghai Composite Index plunged 8.5%, sparking a risk-aversion stampede which boosted EUR and JPY while crushing commodity bloc currencies.
European equity indices and US stock futures sank in sympathy with the Chinese moves which doesn’t bode well for North American equity markets, today. Has Global Warming caused equity market panics to move to August from October? Ask Al Gore.
An equity market rout triggering a global economic slowdown is only part of the reason for Canadian dollar weakness. The break of the psychological $40.00/bb in WTI has opened the door for USDCAD to visit the 61.8% retracement of the 2002-2007 range which is at 1.3440.
The intraday technicals are bullish following the break above the previous high of 1.3203 which targets further gains to 1.3450. There isn’t much in the way of resistance between 1.3240 and 1.3350. A break below the 1.3210-20 area suggests a steeper drop to 1.3170-80, a short term buy zone. For today, USDCAD support will be at 1.3220 and 1.3180. Resistance will be at 1.3290 and 1.3350
Today’s Range 1.3220-1.3320
Chart: USDCAD showing uptrend and break of August top.