USDCAD Overnight Range 1.1935-1.2025  

It was another stellar US Jobless Claims print (264k) which beat the forecast by 11,000 but nervous traders also noted the decline in PPI data and tempered their dollar buying enthusiasm. The Bank of Canada review is due later today and it would be a stretch to assume that it will be all sunshine and unicorns, which should provide some support to USDCAD. GBPCAD and EURCAD demand have also acted as a drag on USDCAD selling

Yesterday’s US Retail Sales report kicked the stuffing out of the US dollar but the New Zealand Retail Sales had the opposite effect during the Asia session.  Kiwi retail Sales rose 2.7% vs expectations of 1.6% and the flightless bird grew wings. AUDUSD was dragged higher as well.

The European session was subdued with FX trading hampered by Ascension Day holiday’s in many countries.

Looking ahead, news that Iran is getting trigger happy and shooting at a Singapore flagged ship may lead to a re-think of some short term US dollar bearish bets and provide some support to the US dollar.

USDCAD technical outlook

The intraday USDCAD technicals are modestly bullish following the break of 1.1935, representing the downtrend line from Tuesday. Additional gains above 1.2020 will suggest that a short term bottom is in place. USDCAD selling below 1.1930 will target 1.1890 and then 1.1835.  For today, USDCAD support is at 1.1930 and 1.1890.  Resistance is at 1.1980 and 1.2020

Today’s Range 1.1930-1.1980

Chart: USDCAD 1 hour with downtrend

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The dollar soars by a record amount versus the euro and the yen in 2014. And economists predict strong growth in 2015. Really? If a country can have a rapidly-appreciating currency with all the benefits that that confers, and strong economic growth with all the obvious advantages that thatconfers, why wouldn’t everyone be going for powerhouse currencies?

Because the two things, a strong currency and accelerating growth, tend to be mutually exclusive in the short run, with a strong currency acting like rising interest rates, slowing growth and making debts harder to service.

So it shouldn’t be a surprise that the latest batch of US numbers are somewhere between disappointing and catastrophic. First-quarter GDP was flat and is about to be revised negative. Retail sales were flat in April, the first month of the second quarter, with business inventories and import prices pointing in the same grind-to-a-halt direction.

The US is now looking at zero growth for the entire first half of 2015. Six years into a recovery, with record low interest rates and a recent doubling of govern ment debt, that’s a bit of a dilemma. Especially given the Fed’s threat to raise interest rates in the next few months.

Rates clearly are not going to be raised, at least not on purpose. On the contrary, slow growth always and everywhere leads panicked governments to break out the stimulus. And the dollar is reacting to this prospect exactly as one would expect, by falling like a stone in the past month.

Gold, meanwhile, is acting like the reciprocal of the dollar, adding $30 an ounce in the past two days.

At the risk of excess repetition, the US is obviously losing the currency war and will soon be forced into a new offensive. Negative interest rates, here we come.

USDCAD Overnight Range 1.2030-1.2110    

The US dollar is down across the board with the global bond sell-off, soft equities and rising oil prices all offered as reasons for the move. More than likely, all those factors contributed as did the herd mentality of traders who were looking for direction. Last Friday’s US employment data didn’t provide any conclusive evidence that the US labour recovery was satisfying FOMC objectives and there has nt been any decent data since or on tap today. That sets the stage for another choppy trading day.

The USDCAD rally stalled at 1.2105 and retreated through support at 1.2080 with the bump in WTI prices above resistance in the $59.90/$60.00/bbl area dropping down to 1.2030 in early New York trading. The lack of top tier domestic data this week means that USDCAD direction is at the mercy of US dollar direction and oil prices.

Greece managed to make the IMF payment due today which may merely be delaying the inevitable or a sign of good things to come.

USDCAD technical outlook

The intraday USDCAD technicals are bearish while trading below 1.2120. The overnight break of support at 1.2080 led to a quick test of 1.2030 which has held, so far.  A move below 1.2030 will extend losses to the key 1.1940-60 area. A break above 1.2120 would negate the downtrend and suggest further 1.2030-1.2160 consolidation.

Today’s Range 1.2030-1.2110

Chart: USDCAD 1 hour with suggested trading band until Wednesday

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USDCAD Overnight Range 1.2075-1.2140  

USDCAD has given up all its overnight gains and is probing the lows despite modestly softer oil prices. A lack of Canadian data today and for the week will leave USDCAD at the mercy of general US dollar direction and oil prices.  Friday’s weak Canadian employment report will ensure traders keep a negative bias towards the Loonie.

Kiwi took it on the beak to start the week with traders unnerved by NZ banks predicting further RBNZ rate cuts, some as early as next month. And speaking of rate cuts, the PBoC announced a 0.25% rate cut to 1 year loan and deposit rates.

EURUSD losses in Asia turned to gains during the European session. There was a definite shortage of Eurozone data, but no shortage of Greek headlines, which provided trading fodder. Greece needs to pay €750 million to the IMF on Tuesday to keep emergency funds flowing.

USDCAD technical outlook

The intraday technicals are bullish while trading above 1.2080 but struggling with resistance at the 1.2150-60 area.  A break of this level would extend gains to 1.2280.  For today, USD support is at 1.2080 and 1.2040.  Resistance is at 1.2140, 1.2160 and 1.2210

Today’s Range 1.2040-1.2120

Chart: USDCAD 1 hour with suggested trading band until Wednesday

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