USDCAD Open (6:00 am EDT) 1.3490-93 Overnight Range 1.3489-1.3518
The US dollar is a tad weaker after this mornings round of soft to mixed economic data. Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the first quarter of 2019 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent. Weekly jobless claims, at 215,000, were on target as well, but Wholesale Inventories rose 0.7%, compared to the 0.2% increase predicted.
The US dollar retreated overnight after testing and failing to break key resistance/support levels in many currency pairs. For example, USDCAD smashed through resistance in the 1.3520-30 level, but the rally quickly faded. Prices bounced between 1.3502-20 until the close. The USDX broke above resistance at 98.05, spiked to 95.18, but closed below the resistance level. The US dollar is vulnerable to a further retreat unless these key levels are broken decisively.
AUDUSD inched higher. April Building Permits were lower than expected but a lot better than the March result. Month-end flows and bearish sentiment fatigue may have also supported prices. NZDUSD tracked AUDUSD higher. The latest NZ budget didn’t have any impact. Modestly firmer US Treasury yields underpinned USDJPY which climbed to 109.81 from 109.49.
The European session was almost a write-off because many countries were closed for Ascension Day holidays. Not the UK. GBPUSD drifted in a 1.2612-39 range, with a negative bias. British oddsmakers suggest the race to replace Theresa May is between Boris Johnson and Michael Gove.
Oil prices rebounded from yesterday’s low, getting a bit of help from the API report that US crude inventories fell 5.26 million barrels in the week ending May 24. WTI is trading in the middle of its $58.86/barrel-$59.67/b range.
USDCAD traders are digesting yesterday’s Bank of Canada monetary policy statement. No one expected rates to change, and they didn’t. However, the BoC’s stated concern that China tariffs were impacting the domestic market was viewed as dovish. USDCAD rallied on the news, but the gains didn’t last. Traders are hoping for more clarity on the BoC outlook from Deputy Governor Carolyn Wilkins speech today.
The intraday techincals are bullish while prices are above 1.3470 but need a decisive break above resistance in the 1.3540 to suggest additional gains to 1.3670 are in the cards. A break below 1.3430, suggests another short term top is in place and targets 1.3370 and then 1.3300. For today, USDCAD support is at 1.3470 and 1.3430. Resistance is at 1.3520 and 1.3550. Today’s Range 1.3470-1.3530
Chart: USDCAD 30 minutes