US DOLLAR RETREATS AHEAD OF ECB MEETING
USDCAD Open (6:00 am) 1.2864-66 Overnight Range 1.2853-1.2890 8 Sept16
NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00pm) to Sept. 8, 6:00 am EDT
The impact from the slightly more doveish than expected Bank of Canada statement yesterday, has dimmed in overnight USDCAD trading. USDCAD ended the day in Toronto at 1.2900 and drifted lower throughout the Asia and European sessions. That was largely due to the massive, 12.08 million barrel drawdown in crude inventories as reported by the American Petroleum Institute. If the EIA Crude Stocks Change report at 1600 GMT validates that report, the Loonie and WTI are in for additional gains. USDCAD was also undermined by better than expected China Trade data.
The better China Trade data gave AUDUSD a boost, making it the best performing G10 currency overnight. USDJPY traded sideways and the Nikkei traded lower.
The countdown to this morning’s ECB meeting has started. EURUSD drifted higher and is sitting at the overnight peak of 1.1265 on reduced expectations of policy action. GBPUSD is above its overnight low but still consolidating yesterday’s losses.
Today’s USDCAD data (Building Permits, Capacity Utilization, New House Price Index) will have little to no impact as it comes right on the heels of the BoC statement yesterday. The BoC is on hold and this data won’t change that.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish while trading below 1.2900 supported by the series of declining “highs” since mid-July and the break below the 1.3000 pivot level. Yesterday’s post-BoC statement spike halted on the intraday downtrend line from last Friday and keeps the focus on 1.2750. A break of 1.2910 would re-target 1.3000. For today, USDCAD support is at 1.2820, 1.2780 and 1.2750. Resistance is at 1.2910, 1.2950 and 1.3000
Today’s Range 1.2810-1.2910