US DOLLAR CONSOILIDATES LOSSES
USDCAD Open (6:00 am) 1.2854-58 Overnight Range 1.2835-1.2860 7 Sept16
NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00pm) to Sept. 7, 6:00 am EDT
The US dollar remains dazed and confused and still reeling from the impact of yesterday’s weak ISM non-manufacturing report. NZDUSD is the best performing G10 currency, bolstered by a jump in manufacturing sales and a healthy Fonterra GlobalDairyTrade auction on Monday. The fact that the Overnight Cash Rate (OCR) is 2% isn’t hurting as global investors hunt for yield. The Australian dollar was under a bit of pressure due to a dip in Q2 GDP to 0.5% from a forecast 0.6%, q/q although the year over year Q2 growth was still a healthy 3.3%. USDJPY dropped from 101.96 to 101.20, undermined by stories of a three-way split on the Bank of Japan policy board and another story stating that the BoJ wouldn’t expand stimulus in September.
EURUSD see-sawed within a 1.1230-1.1265 range in Europe and ignored weaker-than-expected German Industrial Production data. GBPUSD gave back a large portion of yesterday’s gains on when a series of economic reports showed the UK economy may be stumbling. House Prices declined in August and July Manufacturing Production dropped.
Oil prices were not much of a story. WTI edged higher from a low of $44.65 in Asia and currently sits at $45.25. The stories that Russia and Saudi Arabia are talking “production caps” has been enough to temper bearish sentiment even if the chances of an actual deal being done are slim.
The Bank of Canada policy decision is the major event for USDCAD. No one expects a change in interest rates. The Canadian dollar has been appreciating on the back of broad US dollar weakness vs. the majors despite oil prices that are on the soft side of the equation. The 0.6% jump in June GDP may be all the evidence that the BoC needs to say that economic growth is unfolding as they forecast. The risk is if they downgrade the Q3 growth outlook.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish. The break below 1.2920 snapped the uptrend line from the 1.2750 August low which makes that level a target. The intraday technicals are bearish while trading below 1.2870 looking for a move below 1.2820 to extend losses to 1.2750. Longer term, a move below 1.2750 would lead to a test of 1.2660, the uptrend from the January 2015 low. For today, USDCAD support is at 1.2820, 1.2780 and 1.2750. Resistance is at 1.2890 and 1.3030
Today’s Range 1.2780-1.2880
Chart: USDCAD 30 minute