USDCAD has already had a wild morning and the New York session is just a few hours old.  Weaker than expected Canada  Q1 GDP (Actual 1.3% vs forecast 1.8%) lifted USDCAD from 1.2845 to 1.2894.  March GDP at 0.3% was a tick higher than the 0.2% forecast.  USDCAD got an added boost because the US economic reports (Jobless Claims and PCE) data were as expected

USDCAD had a wild 24 hours.  It  touched 1.3038 in Europe on Wednesday and 1.2818 in early trading, this morning.  Yesterday’s “more-hawkish-than-expected”  Bank of Canada policy statement seemed to etch a July rate hike in stone while setting the stage for at least one more hike before the end of the year. (Many economists have predicted two more rate hikes after the January increase)

FX traders had expected a cautious outlook due to the uncertainty around the NAFTA renegotiations which got more intense when President Trump threatened to levy a 25% tariff on all car imports.  Instead, the Bank dropped the word ‘cautious” from the reference to future policy adjustments, implying a faster pace of rate increases.

There are storm clouds on the horizon.  It is D-Day for tariffs.  The US delayed the implementation of tariffs on steel and aluminium imports from Canada and the EU until May 31.  Without another reprieve, the table is set for a tit-for-tat response to any US action, which would limit USDCAD losses.

Europe had a busy FX trading day. It is month-end, and the US dollar was offered. EURUSD traded in a 1.1647-1.1723 range, trading sideways in Asia and climbing in Europe.  Eurozone data helped.   May CPI rose 1.9%, well above the 1.6% forecast April.  Unemployment was unchanged at 8.5% in March.  EURUSD came under renewed pressure in New York trading and is currently trading near the bottom of its 1.1674-1.1707 range.

Sterling tracked EURUSD moves and traded in a 1.3277-1.3345 range overnight but has drifted off the peak in early New York trading.

USDJPY bounced in a 108.53-108.97 range, supported by firmer US Treasury yields and the unwinding of some “risk-aversion” trades.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish following this mornings rejection of USDCAD losses below 1.2820 and the subsequent rally above 1.2870.  The 1.2720-1.3040 range has been intact since April 18  USDCAD has an upside bias while prices are above 1.2750.  For today, USDCAD support is at 1.2840 and 1.2820.  Resistannce is at 1.2890 and 1.2950

Today’s Range 1.2840-1.2930