Loonieviews 17Aug16


Hawkish Fed Chatter keeps USD bid

USDCAD Open (6:00 am) 1.2895-99 Overnight Range 1.2848-1.2916 17Aug.16

FX-At-A-Glance

NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY EOD (4::00pm) to Aug 16, 6:00 am EDT

The Canadian dollar has been on the defensive since yesterday morning when New York Fed President Dudley warned that interest rate hikes were coming and September was a possibility. Mr. Dudley’s hawkish message was seconded by Atlanta Fed President Dennis Lockhart who said about interest rates; “I would not rule out September”. That made US dollar bears rather nervous and they rushed to cover position’s established the day before when the San Francisco Fed President John William’s was sending a message that US rates weren’t going anywhere.

USDJPY climbed steadily from 100.18 to 101.18 while Aussie, Kiwi and the Loonie are in full retreat. Meanwhile EURUSD see-sawed within a narrow 1.1254-1.1288 band. GBPUSD remains very indecisive around the 1.3000 level, unsure whether to rally or sink. This morning’s drop in UK Jobless claims caught forecasters off-guard (Actual -8.6K vs. forecast 9.5k) and Sterling got a bit of a boost although looming Brexit risks suggest that the claims data is too good to last.

Oil traders appear to be ignoring the US rate hike drama, sparked by various Fed speakers. WTI rose steadily yesterday and has been since August 11. Traders sold WTI after yesterday’s API weekly Crude Stocks report of a decline of 1 million barrels due to a rise in gasoline stocks. Still, the decline was shallow and WTI is still above $46.00/b. Today’s EIA Crude stocks report may provide some clarity.

USDCAD traders ignored the firming oil prices and concentrated on the shift in US rate hike sentiment which propelled USDCAD to a peak of 1.2916.

St Louis Fed President James Bullard speaks around lunch time, giving him an opportunity to further muddy the rate hike waters. After that, the FOMC minutes will be released.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish. The downtrend line from August 9 at 1.3188 was broken with the move above 1.2880 overnight. The minor uptrend from yesterday’s low of 1.2797 remains intact while prices are above 1.2870, looking for further gains to 1.2950 and then 1.3010. A move below 1.2860 would lead back to 1.2800. For today, USDCAD support is at 1.2860, 1.2830 and 1.2800. Resistance is at 1.2920, 1.2950 and 1.2990.

Today’s Range 1.2870-1.2960

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Author: Loonieviews

In the past 30+ years, I have been an FX interbank market making trader, a high performing FX and Derivatives Sales person, creator of simple and complex risk mitigation strategies and a manager of high performance FX teams. The Trade of the Day is a culmination of that experience. Retail FX traders have access to a well-crafted and carefully researched FX trade strategy designed to generate FX profits while mitigating losses.

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