Every man takes the limits of his own field of vision for the limits of the world.
—Arthur Schopenhauer

As we all know, the baby boomer generation is heading into retirement and expected to add further strain to a costly healthcare industry and underfunded public pension system. But, just as the sun sets on one generation, it rises again on another. 

As Goldman Sachs recently noted, “The Millennial generation is the largest in US history and as they reach their prime working and spending years, their impact on the economy is going to be huge.”

This pack of 92 million individuals born during the age of personal computers, which are now entering that time when they start buying homes, getting married, reproducing, and generally preparing for the future.

…continue reading and viewing some impressive charts HERE

USDCAD Overnight Range 1.2315-1.2380    

The US dollar is on a tear, climbing across the board, while ignoring a worse than expected Durable Goods report. There is no specific catalyst for the move and EUR and CHF are the biggest losers.  The dollar gains are despite news that a Greece/EU deal is expected by Wednesday and that the ECB bumped up the limit on emergency funding to Greek banks. Positive data in the form of better than expected PMI’s from Germany and the Eurozone were also ignored

However, those expecting EURUSD to rally on the news were left scratching their heads and marking down position values. EURUSD dropped without a discernable reason and has continued to fall since New York walked in.  Some believe that since EUR is a funding currency it gets sold in periods of risk seeking. Others think that it was merely due to the rebuilding of long US dollar positions.

The rising US dollar has lifted USDCAD which has tested resistance in the 1.2380 area.  EURCAD selling and WTI oil prices holding steady in the $60.00/bbl area have helped to slow the dollar’s rise but the Loonie is still vulnerable to further weakness.

USDCAD technical outlook

The intraday USDCAD technicals are bullish.  The break above 1.2290 yesterday snapped a two week downtrend with the current minor uptrend intact while trading above 1.2320. A break of resistance in the 1.2350-70 area will extend gains to 1.2420.  For today, USD support is at 1.2320 and 1.2280.  Resistance is at 1.2360, 1.2380 and 1.2410

Today’s Range 1.2320-1.2380

Chart: USDCAD hourly with uptrend line noted             Larger Chart

USDCAD Overnight Range 1.2218-90        

USDCAD ticked steadily higher in early New York trading and then popped toward resistance in the 1.2290-1.2305 area following the release of Canadian CPI and Retail Sales reports. CPI was slightly higher than expected but a much weaker than expected April Retail Sales report (Actual -0.1% vs forecast of 0.7%) did all the damage.

It was a very quiet overnight session.  Greece uncertainty and FOMC alchemy transfixed FX markets this week and will repeat the process next week. Greece wants debt relief and the EU and the IMF want debt repaid.  The clock is ticking down to default. EURUSD has been extremely resilient to the latest Greek exit worries and it may be simply because traders are more fatigued from US rate hike chatter and the meaning of the dots then they are with Greece stiffing the Eurozone.

The highlight of the Asian session was that the Bank of Japan left policy unchanged which was expected. The BoJ governor avoided talking about the JPY after being badly burned two weeks ago. 

USDCAD technical outlook

The USDCAD technicals are modestly bullish but need to break resistance in the 1.2290-1.2305 area which would set up a test of key resistance in the 1.2350-70 zone. If this level holds, it would suggest that the bounce from yesterday’s 1.2125 low is merely corrective and that the downtrend from March will resume.  For today, USD support is at 1.2240 and 1.2210.  Resistance is at 1.2305, 1.2340 and 1.2360

Today’s Range 1.2240-1.2305

Chart: USDCAD 4 hour with downtrends and resistance        Larger Chart

One way of grasping the latest tumble in the US dollar is to think of the following:

As expectations of a 2015 Fed hike grew increasingly cemented in the market, traders demanded a higher bar of positive US data performance, especially as macro-normalisation in Europe transitioned into outright progress. Not only most US figures failed to show a sufficient upside surprise since end of April, but business surveys and inflation data from Europe revealed evidence of progress from the ECB’s QE program.

In Jan-Mar, the greenback soared to decade highs against most currencies on the possibility that the Fed would raise interest rates in 2015. In yesterday’s FOMC announcement, the USD sold off due to bigger than expected downgrade in 2015 GDP growth (revised to 1.8-2.0% from 2.3-2.7% in March), as well as lack of clarity with regards to the pace of future Fed hikes.

Although 15 of 17 FOMC officials expect lift-off to begin this year, FX markets require a faster pace of subsequent rate hikes in order for the US dollar to regain the momentum it once had when the possibility of a 2015 rate hike were sufficient for the rally.

The US dollar rally has now reached critical levels on both fundamental and technical grounds.

Fundamentally:

– Bank of England will likely have at least two hawks dissenting against the monetary policy status quo by end of summer due to persistent improvement in jobs and earnings figures, as well as anticipated rise in inflation data.

– Increased probability that Eurozone CPI will overshoot the ECB’s 0.3% y/y projection, with 0.8%-0.9% as the more likely year-end figure — should sway the German-US yield spread further near positive levels from the current -152 bps.

– Increased resistance inside the Bank of Japan’s policy board over stepping up monthly further asset purchases will stand in the way of further yen weakness, especially if US and European bourses are rattled by the simultaneous threat of disappointing US earnings season and persistent chatter of 2015 Fed lift-off.

Technically, the ensuing Death Cross formation in the US dollar index, and Golden Cross in EURUSD (occurring when key measures of short-term trend exceed longer-term trends) is taking place for the first time since almost exactly 365 days. The developments are backed by important resistance levels in GBPUSD and EURUSD, while USDJPY tests key 122.30 support foundation. (Click Image for Larger Clhart)

USDCAD Overnight Range 1.2314-1.2343    

There is a whole lot of nothing going on.  G-10 currencies are bouncing around in narrow, short term and well defined trading bands without any clear catalyst to explain price action.  Traders are complaining that liquidity is poor which exaggerates moves.

Overnight, the RBA minutes were released which added a layer of confusion into AUDUSD. The minutes were not as doveish as the RBA governor was in his speech last week but were soon forgotten. Bank of Japan governor, Kuroda, was back-pedalling from his FX comments last week which gave USDJPY a boost. In Europe, EURUSD spiked to 1.1330 and then retreated just as quickly without any clear reason for either move.

This morning’s May US Building Permits (Actual 1.275 mio) beat consensus while April Housing Starts missed which was essentially a wash and the US dollar barely noticed. Today will be a repeat of yesterday-a lot of noise inside well established ranges.

USDCAD technical outlook

The intraday technicals are bullish. USDCAD is in an uptrend from the May 11th low of 1.1930 which comes into play at 1.2300. In addition, the minor uptrend channel from last week’s low remains intact above 1.2310 with resistance seen at 1.2360 and 1.2390. At the same time, the downtrend from the March is still valid while below 1.2540.  For today, USDCAD support is at 1.2310 and 1.2280.  Resistance is at 1.2360, 1.2390 and 1.2420

Today’s Range 1.2310-60

Chart: USDCAD hourly                                          Larger Chart