USDCAD Overnight Range 1.3292-1.3352  

It was a sombre start to the week. There was a brief bout of risk aversion during the early Asian opening which quickly dissipated as traders gave a middle finger salute to the denizens of a pretend caliphate. Imagine the surprise on the faces of the ISIS “martyrs” when they find out that the promised 72 virgins are all 6’5”, 320lb men.

Overnight, the IMF has endorsed China’s inclusion in the SDR basket which overtime will provide support to CNY. Japan posted poor Q3 trade numbers (-0.8%) after a similarly weak Q2 performance (0.7%). That qualifies them for the “Technical Rescission” ribbon. The New Zealand dollar dropped on the initial “risk aversion” sentiment and never recovered.

The Canadian dollar is looking very vulnerable and this morning’s Manufacturing Shipments data didn’t help. The 1.5% decline in September vs. the forecast of a 0.1% gain helps maintain the focus on the health of the Canadian economic recovery. But the real issue is oil prices.  WTI is attempting a decisive break through support at $40.70/barrel, which if successful, could open the door to a steeper decline to $32.50/barrel. It appears that until WTI breaks sharply lower, USDCAD gains will be capped in the 1.3350-70 area.

There are a trio of Fed speakers scheduled today (Mester, Dudley, Lockhart) but if last weeks Fed speeches are an indication, their comments will be stale and therefore ignored.

USDCAD technical outlook

The intraday USDCAD technicals are in an uptrend while trading above the 1.3290-1.3310 area and looking to extend gains above the 1.33450-60 zone for a test of the 2015 high of 1.3455. A move below 1.3290 will lead to a drop to 1.3240 and then 1.3190-1.3210.  For today, USDCAD support is at 1.3280, 1.3240 and 1.3210.  Resistance is at 1.3330, 1.3350 and 1.3390.

Forecast Range for the day 1.3290-1.3370

Chart USDCAD 4hour