Overnight Range 1.2800-1.2954
There was a flurry of activity when the US CPI data was released. CPI for July was flat, year over year, which was expected but the news still resulted in a squeeze of short US dollar positions. USDCAD leapt to 1.2850 from 1.2800. Traders ignored a modest bump in Canadian manufacturing shipments.
Overnight, the US dollar scrambled in full retreat against the majors in Europe after a slow start in Asian. AUDUSD started off the session with an offered tone but that changed in the run-up to the RBA minutes. The minutes were described as confusing but implied a reduced risk of additional rate cuts which gave AUDUSD a lift. Kiwi followed suit.USDJPY traded below 100.00 in early New York trading.
A report by San Francisco Fed President, John Williams, that called for higher inflation targets suggesting that “higher inflation targets would imply a higher average level of interest rates and thereby give monetary policy more room to maneuver” got some attention
The soft USDJPY profile helped lift EURUSD through resistance at 1.1230. as did the ZEW survey. In Germany, ZEW Current situation rose to 57.6, beating the forecast of 50. Even GBPUSD recovered from its lows aided by better than expected CPI data but the rally wasn’t enough to get Sterling above the 1.3000 level until New York opened.
Global equity indices closed or are still sitting in the red but US equity indices are in the green. Gold bulls like the weak dollar and pushed gold prices up over $12.00/oz. WTI oil prices continued to climb buoyed by the weak dollar and optimistic sentiment ahead of the Opec meeting at the end of September.
The Canadian dollar is basking in the glow of general negative US dollar sentiment and rising oil prices. Last week’s bullish USDCAD sentiment has turned bearish with this morning’s decline through support in the 1.2830-40 area
USDCAD technical outlook.
The intraday USDCAD technicals are bearish while trading below 1.2910 and supported by the break of the 1.2830-40 area which sets up a test of the 1.2760 level, representing the 61.8% Fibonacci retracement level of the May-July range. For today, USDCAD support is at 1.2805 and then 1.2760. Resistance is at 1.2860 and 1.2880
Today’s Range 1.2810-80