USDCAD Canada Day Range 1.2490-1.2595
Overnight Range 1.2565-1.2630
The Loonie got spanked while Canadians got tanked (some of them anyway) and the rest were singing O’ Canada. A perfect storm combining weak GDP data, a resurgent US dollar on interest rate divergence and a steep drop in oil prices caused a stampeded to buy USDCAD. The move was exacerbated by poor liquidity and the break of key resistance levels. Today’s US nonfarm payrolls report was widely expected to come out on the strong side of forecasts due to improvements in the employment components of other data. That didn’t happen and early (and overnight) US dollar gains were quickly erased. US NFP showed a gain of 223K vs forecasts of 233K and 0 for the average hourly earnings s component. The sting of these misses was eased by the drop in the unemployment rate to 5.3% from 5.5% last month. The US dollar is still jockeying for position following the data but once the intraday positioning gets cleaned up, the underlying bullish bias will reassert itself.
Yesterday and overnight, the Loonie wasn’t the only currency to get whacked. All the G-10 currencies suffered the same fate. Soft data from Australia and rate cut fever in New Zealand drove the antipodeans lower. A report that three large Japanese pension funds were shifting their asset allocations to a more aggressive strategy, helped drive USDJPY higher.
The upcoming Greek referendum has pushed the EU/Greece story to the sidelines in FX trading, at least until late Sunday.
USDCAD technical outlook
The intraday and short term USDCAD technicals are bullish. The downtrend from the March peak of 1.2820 was snapped with yesterday’s break above resistance in the 1.2490-1.2505 area which was also the neckline of an inverse head and shoulders pattern. This break implies further gains to the 1.3300 area in the medium term.
The intraday USDCAD technicals are bullish while trading above 1.2580, looking for a break of 1.2630 (overnight high) to extend gains to 1.2880 and then 1.2940. A move below 1.2570 would lead to a test of support at 1.2520.
Today’s Range 1.2560-1.2630
Chart: USDCAD daily with neckline break of inverted head and shoulders