Overnight Range  USDCAD 1.2801-1.2856             

The US dollar was unwanted and unloved in a lively overnight FX session. The release of the minutes from the July 27 FOMC meeting show that the policymakers don’t agree on the outlook for the US economy and when, if ever, to increase interest rates. The US dollar was sold across the board.

In Asia, AUDUSD got an added boost on better than expected employment data.  Australia added 26,200 new jobs in July (forecast 11,000) and the unemployment rate dipped to 5.7% from 5.8%.  NZDUSD followed the Aussie dollar higher.  In Japan, the Vice Finance Minister was whining about “excessive FX moves” and warning traders that he was “watching markets closely”.  That was enough for nervous traders to lift USDJPY from 99.65 to 100.49.  The Nikkei close down 1.55% on the day.

In Europe, EURUSD climbed steadily on sentiment that US interest rates weren’t going anywhere, anytime soon.  EURUSD broke above resistance in the 1.1285 area, triggered some stop losses and rose to 1.1331.  Sterling has had a good day as well. GBPUSD bounced after the FOMC minutes were released, touched 1.3085 in Asia and then retreated back to 1.3050 until mid-morning in London.  That’s when UK Retail Sales data surprised to the upside (July-Actual 5.9% vs. forecast 4.2%, y/y) GBPUSD exploded higher, hitting 1.3170 before pausing.

The general bearish US dollar sentiment lifted oil prices.  WTI traded in a $46.59-$47.15 range which has provided additional support to the Canadian dollar.

The USDCAD story is the US dollar story with a few chapters on oil prices. Canada will unleash Retail Sales and CPI data tomorrow but with the Bank of Canada still three weeks away, any impact from the data will be fleeting.

USDCAD technical outlook.

USDCAD continues to chop around within the well-defined 1.2650-1.3250 trading band that has contained price action since the beginning of May.  The failure to extend gains above 1.3200 on August 9 and the subsequent move below support at 1.2990 shifted the focus back to 1.2650.  The intraday technicals are bearish while trading below 1.2890 looking for a break of 1.2790 to extend losses to 1.2740 and then 1.2710.  A break above 1.2890 puts 1.3000 back in play.  For today, USDCAD support is at 1.2790 and 1.2740.  Resistance is at 1.2850 and 1.2890.

Today’s Range 1.2770-1.2870