LOONIE AND BLUE JAYS GET BEATEN UP
USDCAD Open (6:00 am) 1.3005-10 Overnight Range 1.3034-1.3112 12 Sept 16
NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00pm) to Sept. 9, 6:00 am EDT
A risk aversion chill has given FX markets shivers and put the US dollar in demand. The greenback is starting the New York session with gains against all the G10 currencies except for yen in part due to a lack of fresh information and direction. There wasn’t any data of note in any region leaving traders to fret about last week’s developments. The uncertainty spread to equities as well. Global equity indices are a sea of red and US equity futures are also down.
Asia traders started the week nervously, buying yen and selling Aussie and Kiwi. Rising uncertainty ahead of the September 21 Bank of Japan policy meeting added to the JPY demand while lower oil prices put the commodity currency bloc on the defensive.
European markets pick up the nervous sentiment from Asia and continued to buy dollars. The ECB’s unexpectedly neutral statement last Thursday has raised questions about the quantitative easing program, its effectiveness and whether it will be expanded, extended or curtailed. That raised questions that perhaps the EURUSD rally had been overdone.
The Canadian dollar was already on the defensive because of the latest doveish Bank of Canada outlook which turned into a full retreat overnight due to the increased in risk aversion sentiment. Additional oil price weakness, in part due to rising rig counts in the US, exacerbated the move. In addition, various positioning indicators suggest that FX traders were short USDCAD and got squeezed with the move above 1.3050.
FX traders looking for direction won’t find it today. There are a couple of Fed speakers on tap but there isn’t any data of note.
USDCAD technical outlook.
The intraday USDCAD technicals are bullish while trading above 1.3075 supported by the break above 1.2975 and looking for a break through the 1.3150-1.3300 resistance zone that has capped USDCAD rallies since March. The steepness of the uptrend warns that a retracement could be just as fast. A break above 1.3150 will extend gains to 1.3200 which is guarding additional resistance at 1.3250. A move below 1.3070 will lead to a retest of 1.3030. For today, USDCAD support is at 1.3070 and 1.3030. Resistance is at 1.3150 and 1.3200
Today’s Range 1.3050-1.3150