USDCAD Overnight Range 1.3187-1.3265        

The US dollar plunged following the worse-than-expected nonfarm payrolls report.The Canadian dollar rallied but only for a nanosecond. A steep plunge in WTI prices (from $45.25 to $44.20/barrel) took the bloom off the rose and USDCAD rallied to above where it was, pre-data.

The NFP report was ugly. Not only did job gains miss forecasts but Hourly Wage Earnings declined as well. And, to rub salt in the wound the July and August NFP gains were revised lower. Yesterday, Richmond Federal Reserve president, Jeffry Lacker’s said that an October rate hike was still possible. He has probably changed his tune.

The Canadian dollar may suffer due to renewed fears that today’s payrolls data confirms the idea that the global slowdown is impacting US growth which suggests reduced demand for oil prices. At the same time, Canada gets a slew of important data next week, including Merchandise Trade, PMI, Housing Starts and employment.  Any evidence of a rebounding Canadian economy should limit USDCAD gains.

The overnight session was typical of a pre-NFP release day.  Regional data releases had a short lived impact Australian Retail Sales gave AUDUSD a boost even though it was as expected. The gains were mostly erased in Europe. Elsewhere, Cable caught a bid on better than expected Markit/CIPS construction PMI and like AUDUSD, the gains were not sustained.                                                                                                                                                                                    

USDCAD technicals are bullish following this morning’s dip to the 61.8% Fibonacci retracement level of the September range, and subsequent bounce. The intraday downtrend was snapped on the move back above 1.3220 which suggests further gains to 1.3280. If you ignore the spike low from the June FOMC spike lower, the USDCAD uptrend remains intact while trading above 1.3150.  For today, USDCAD support is at 1.3210 and 1.3180.  Resistance is at 1.3260 and 1.3280

Today’s Range 1.3180-1.3260

 Chart USDCAD 30 minute

,            

September 30 (King World News) – Richard Russell:  “For those of us who are hoping for the best for the US, (Monday) was a discouraging day. I’m seeing something I haven’t seen in years.”

….read more HERE

USDCAD Range 1.3320-1.3375            

USDCAD awoke to demand in early New York trading following a sleepy Asia/Europe session. A small drift lower in oil prices started the move which extended after New York Federal Reserve President William Dudley said that the Fed remains on track for a rate hike. He also said that October was a “live” meeting.  However, it’s not like he hasn’t said the same thing over and over and the rally stalled.

Overnight, USDCAD traded sideways within a fairly narrow band torn between the prospect of another shift to risk aversion on a global slowdown and improving prospects for the US economy with a dash of oil price stability thrown in. Wednesday’s GDP report may provide additional Canadian dollar support if it posts a better than expected 0.2% gain.

FX markets were directionless and unsettled in both Europe and Asia ahead of a heavy data week which has likely set the tone for today’s North American session.  There wasn’t much in the way of data this morning so traders are wondering if there are any implications from the US Speaker of the House,John Boehner’s resignation. Another government shutdown, perhaps?

The IMF President, Lagarde, said that their July objective for 2015 growth is likely unattainable now and may revise the estimate down, in October.

USDCAD technical outlook

USDCAD is in a modest uptrend while trading above 1.3320 with a break above 1.3380 targeting 1.3415 and then 1.3460. On the day, a move below 1.3220 will lead to 1.3170. However, the rally from the May low remains intact and unless 1.2950 breaks decisively, any move lower is merely a correction.

Today’s Range 1.3310-1.3380

Chart: USDCAD 30 minute highlighting trading range

USDCAD Range 1.3015-1.3182        

A series of Fed speakers today and over the weekend made hawkish noises and since they were all from the hawkish camp, the noises shouldn’t be unexpected.  Nevertheless, they managed to give the US dollar a lift across the board with their suggestions that a 2015 rate hike remained a strong possibility.

USDCAD climbed off Friday’s roller-coaster ride and traded sideways throughout the Asia session before edging lower in Europe. Part of the Loonies modest gains can be attributed to a report that Opec is forecasting oil to be at $80.00/bbl by 2020, which is a grasping at straws type of move on a sketchy forecast. But that was Europe.  In North America, USDCAD has rallied, despite the WTI bump higher due to general US dollar strength vs. the majors.

Japan is closed until Thursday for various holidays sucking out a ton of liquidity during the Asian time zone. Since the FOMC members pointed to China growth concerns as a recent for standing pat, Chinese PMI data on Wednesday may be a bigger factor for FX

Bank of Canada governor, Stephen Poloz gives a speech in Calgary today which may provide clues as to how the BoC views the risks to the Canadian economy from a global economic slowdown. The text is available at 2:30 pm EDT

Technical Outlook

USDCAD continues to churn within the well-defined 1.3000-1.3350 range.  There is a minor intraday downtrend which remains intact while trading below 1.3250 that will extend losses to 1.3110 on a break of 1.3180. The post rate cut rally from July ended with a break below 1.3200 last week which should limit the top to 1.3250-70 this week.

Today’s Range 1.3180-1.3250

Chart: USDCAD hourly                                    Larger Chart