USDCAD Overnight Range 1.2913-1.3034                                            

USDCAD started the day in New York on the defensive and traded steadily lower ever since. And that’s because WTI cracked the “psychologically” important $50.00/barrel level in WTI. It has dealt as high as $50.21 so far today.  Oil traders are all over the story that the global supply glut is diminishing and that is boosting the Canadian dollar.

USDCAD even managed to ignore the strong data releases from the US, led by Durable Goods posting a 3.4% gain in April. Jobless Claims were also better than forecast.

USDCAD was offered at the end of the day on Wednesday undermined by the double-whammy of an “arguably non-doveish” Bank of Canada statement and rising oil prices. That theme played out overnight as well.  Asia traders drove USDCAD to support at 1.2970 which held until mid-morning in Europe when the support gave way. While that was happening WTI was attempting to crack the $50.00/barrel level. It couldn’t.

The overnight FX story was a tale of a (modestly) soft US dollar although not against Kiwi. NZDUSD dropped from 0.6764 to 0.6695 when Fonterra’s (dairy co-op) opening payout forecast for the 2016/17 season was well below the median dairy farmers break even price.  The New Zealand budget was a non-event for FX markets.

AUDUSD recovered from weaker-than -expected CAPEX data and had a ragged rally, opening in New York just below session highs. USDJPY went for a walk-about in early Asia trading dropping from 110.15 to 109.40, a move that left traders scratching their heads. It spent the rest of the overnight session recouping the losses and opened in New York around 110.00.

UK data was a focus in European trading. GDP was a teensy-weensy disappointing at 2.0% vs. forecast of 2.1%, q/q which was enough to knock GBPUSD from 1.4730 to 1.4677. Sterling has since recovered most of those losses with trading still being driven by Brexit concerns.  EURUSD meandered aimlessly, again.

The focus now shifts to tomorrow’s Janet Yellen speech. However, due to UK and US holidays on Monday, there may not be enough traders around for her speech to have much of an impact.

USDCAD technical outlook

The intraday USDCAD technicals are bearish with the break below 1.3040 yesterday and the overnight drop through 1.2970 which is now targeting minor support in the 1.2900-10 area. If that level goes, it will open the door to a move to the 1.2650-70 zone.  A break above 1.2980 will lead back to 1.3060.  for today, USDCAD support is at 1.2930, 1.2890 and 1.2860.  Resistance is at 1.2980, 1.3030 and 1.3060.

Chart: USDCAD 4 hours