USDCAD   Overnight Range 1.2648-1.2755        

The headline says it all. Oil prices are leaking lower on a combination of rising supply and a rising US dollar. Canadian data isn’t helping matters either.  Today’s Merchandise trade report is far worse than expected (Deficit widened to -$3.3 billion) and exports declined 0.6% in May. Today’s data and last week’s soft GDP report will fuel calls for another Bank of Canada rate cut at the July 15^th meeting. And if that wasn’t enough, the Canadian dollar is also being sold on the back of general US dollar strength stemming from the Greek debt crisis and the break of key support levels in EURUSD.  USDCAD extended yesterday’s gains in Europe and then accelerated in early New York trading, breaking above the overnight high of 1.2730 and touching 1.2760, so far today.

FX trading was extremely quiet in Asia although AUDUSD traders made a bit of noise around the RBA rate announcement. Rates were left unchanged with the usual nod to the need for AUD depreciation. European markets were livelier with trading driven by a spate of negative headlines on Greece. Emergency meetings by EU Finance Ministers will ensure a fresh supply of news throughout today.

USDCAD Technical Outlook

The intraday and short term technicals are bullish following the break of resistance at both 1.2640 and 1.2670.  The move above the 1.2720-30 area will extend gains to the 1.2820-50 zone and suggests that a short term bottom is in place at 1.2630. Above 1.2850 puts 1.3050 is play. A retreat below 1.2630 would lead to 1.2510 but keep the current uptrend from June intact.  For today, USDCAD support is at 1.2710, 1.2680, and 1.2640.  Resistance is at 1.2760 and 1.2780 and 1.28720

Today’s Range 1.2710-1.2810

Chart: USDCAD 4 hour with new range