USDCAD Overnight Range 1.2512-1.2577    

USDCAD found a short term floor yesterday at 1.2390 and bounced like a “Wham-O SuperBall” off pavement, rising 0.0150 points before a pause and then grinding even higher after the FOMC minutes. News headlines trumpeted “FOMC split on June rate hike”.  That headline isn’t just misleading its plain wrong.  The FOMC minutes said “Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting”. Several is not a split. Nevertheless, it got the ball rolling and the US dollar was in demand.

The overnight FX markets were a tad wonky with Asian US dollar sellers becoming European dollar buyers.  Greece apparently made a €450 million payment to the IMF giving a short lived pop to EURUSD. To the surprise of no one, the Bank of England left rates unchanged

USDCAD dropped from 1.2560 to 1.2520 as NY walked in coinciding with a jump in EURUSD to 1.0775 from 1.0738.  Canadian Building Permits were below consensus at -0.9% (Forecast 2.2%) and the New House Price Index edged higher. The impact on the currency was negligible.

USDCAD technical outlook

The intraday USDCAD technicals are bearish.  The failure to extend gains beyond 1.2580 with a break of minor support in the 1.2490-1.2505 area will lead to another visit to major support at 1.2390-1.2410. Only a gain above 1.2880 would negate the downward pressure. For today, USD support is at 1.2490 and 1.2460.  Resistance is at 1.2540 and 1.2580.

Chart: USDCAD hourly showing the range (between the red lines)

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This is the first day of the FX week for many markets. The US dollar has recouped all of its post-NFP losses against EUR and JPY but still has a ways to go against CAD. The weak NFP report (Actual 126k vs. Forecast 245K) is being dismissed as a weather-influenced blip and nothing to sway the FOMC from their rate hike path.

AUDUSD was the big story in Asia. The RBA left rates unchanged, catching many traders by surprise and AUDUSD soared. The question is whether the RBA is merely delaying the inevitable until the next meeting or will it be a more protracted pause. The BoJ monetary policy meeting has started and is expected to be a non-event for FX. In Europe, traders ignored PMI data from the Eurozone, Germany and the UK.

The Canadian dollar traded in a narrow range ignoring chatter of oil price downside risks on Iran/China discussions and yesterday’s BoC Business Outlook survey. That changed in the early NY session will USDCAD buyers testing resistance at 1.2520, which has held. The lack of both US and Canadian data suggests further range trading today.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.2440 with the break above 1.2470 suggesting further gains to 1.2550. A move below 1.2440 will lead to another test of support in the 1.2380-1.2410 area.

The short term 1.2350-1.2820 range since mid-January remains intact.

Today’s Range 1.2450-1.2520

It is my largest position. Janet Yellen is going to raise interest rates or the market is going to raise interest rates. Rates are going to go higher and when that happens the Japanese are not going to raise rates, the Europeans are not going to raise rates. So, the dollar can go much, much higher. 

Monthly Chart

Dollar Index: How High Can It Go?

USDCAD Overnight Range 1.2558-1.2650            

USDCAD is probing support and the overnight low following better than expected Merchandise Trade data. The February Trade deficit narrowed to 0.984 billion.January’s deficit was revised from $2.5 billion to $1.5 billion. The Canadian dollar is also benefiting from general US dollar weakness as reduced NFP forecasts and holidays convince traders to trim long dollar positions.Relatively firm oil prices are not hurting either.

That was the story in overnight as well. The US dollar drifted lower against most of the majors (except AUD) in a cautious Asia and European session. Most markets are closed on Friday for Easter/Passover except for the US and just to keep things interesting,US nonfarm payrolls will be released. Gains of 300K and above or 200k and lower would create some drama while any job gains inside of 200-300K will just be noise.

AUDUSD came under renewed pressure in Asia on elevated risks of a RBA rate cut next week,touching a six year low. In Europe. The Iran /West nuclear talks are continuing despite the March 31 deadline lapsing. Greece debt renegotiation attempts are keeping EUR bulls on their toes. And EURUSD is offered.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.2590-1.2600 but needing a break of support in the 1.2550-70 zone to extend losses to 1.2510 and then 1.2460.  A move above 1.2600 will target 1.2650.

The long term USDCAD outlook is bullish. A sustained break above 1.2600 on a weekly chart, which represents the 50% retracement of the entire 2002-2007 range, targets the 61.8% retracement level of 1.3430. That move is far from a sure thing. USDCAD failed to extend gains much above 1.3000 despite many attempts in Q4 2008 and Q1 2009. The weekly chart is shaping up in an eerily similar pattern.

Chart: USDCAD weekly with Fibonacci

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USDCAD Overnight Range 1.2598-1.2670                                                           

USDCAD climbed steadily higher overnight and during the early North American session.Falling oil prices are to blame. WTI dipped to $47.70 with expectations that an Iranian nuclear deal could lead to another million barrels per day of crude hitting the market as sanctions get removed. Anticipation of better than expected US data this week, including non-farm payrolls on Good Friday, is also providing the US dollar with support.

Trader’s ignored better than expected Industrial Product Price and Raw Materials Price Index data.US data PCE data was mixed while Pending Home Sales beat forecasts.

It was slippery but thin overnight session with rising nervousness over progress on Greece negotiations weighting on EURUSD in a thinner than usual market due to month-end, quarter-end and Japan year-end. Falling iron ore prices kept downward pressure on AUDUSD and USDJPY firmed in Europe.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.2610 looking for a break of resistance at 1.2670 to extend gains to 1.2820. A move below 1.2610 points to a retest of 1.2550. USDCAD is almost exactly in the middle of the March 1.2410-1.2820 range.  For today, USD support is at 1.2610, 1.2580 and 1.2550.  Resistance is at 1.2680, 1.2710 and 1.2750

Today’s Range 1.2610-80

Chart: USDCAD 1 hour                                     Larger Chart