USDCAD Overnight Range 1.2430-1.2540

FX traders have been cuffed upside the head this morning.EURUSD climbed steadily in Europe,breaking above 1.1000 in early New York trading and then collapsed to 1.0915 following  improving US CPI data.USDCAD traded in the same vein, dropping to a low of 1.2430 ahead of the US data and then soaring to 1.2530 afterwards. These vicious moves can be blamed on the re-introduction of two way risk to one-way bets.

Asia was a much calmer market for USDCAD which edged higher, in part due to AUDCAD and NZDCAD demand but lost those gains (and then some) during the European session. The on-going reduction of long USD dollar positions against the majors particularly EUR, and a dearth of domestic data are the main drivers of Canadian dollar direction. A minor bump in WTI prices was icing on the cake for CAD bulls.

Asian traders ignored both Fed Vice Chair Fisher’s comments that US rates could rise by year end & the weaker-than-expected HSBC China PMI (Actual 49.2 vs. forecast 50.5) and bought AUD, NZD and JPY suggesting that position reduction trumps data, again.In Europe, Eurozone and German PMI data beat forecasts added to the positioning incentive to sell US dollars. In the UK, headline CPI sank to 0.0% while PPI also missed forecasts leading to GBPUSD selling.

USDCAD technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.2540 looking for a deeper test of strong support in the 1.2440-60 area to extend losses to the 1.2350 area.  A break above 1.2350 points to further losses to 1.2050. However, the short term trend is bullish while trading above 1.2440-60 representing rising trend line support and multiple bottoms since January.

Today’s Range 1.2470-1.2540