Loonieviews 23Sep16

Oil spikes on Saudi offer

USDCAD Open (6:00 am) 1.3046-50 Overnight Range 1.3041-1.3088 23 Sept 16


NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00 pm) to Sept. 23, 6:00 am EDT

The New York morning was just getting started when a headline shot across the screens. “Saudi’s offer oil cut if Iran freezes output”. That caused a minor kerfuffle. WTI, which had drifted steadily lower during the European session, was sitting at $46.50. It immediately spiked to $46.25 on the news. USDCAD dropped to 1.3038 from 1.3075 on the news.

In Asia, USDJPY ticked higher on profit-taking ahead of the weekend but couldn’t hang on to the gains. Japan Manufacturing PMIO beat expectations with a 50.3 print. (forecast 49.3). AUDUSD and NZDUSD moved sideways until Europe opened and then dropped to the low of the session. The prospect of additional rate hikes by the Reserve Bank of New Zealand has undermined Kiwi.

In Europe, Eurozone and German Manufacturing PMI’s were above the consensus. Germany posted 54.3 vs forecast of 53.1 while Eurozone was 52.6 vs. forecast 51.5. EURUSD ticked higher on the data. Meanwhile, negative news stories about the impact of Brexit on the UK’s banking industry have driven GBPUSD below 1.3000, again.

It is a big day for the Canadian dollar. Retail Sales (forecast 0.1% m/m, ex-autos 0.5% m/m) and CPI (forecast 0.1% m/m) could provide some trading fodder. A big miss and a retreat in WTI would drive USDCAD back to 1.3120 while rising oil prices and an upside surprise would lead to a test of 1.2990 support. The US dollar has lost ground against the G10 currencies except for GBP and NZD leaving plenty of room for profit taking ahead of the weekend.

USDCAD technical outlook.

The intraday USDCAD technicals are bearish. A minor uptrend at 1.3060 was broken with the post Saudi/Iran news suggesting that the bounce from 1.3000 to 1.3090 was merely corrective. A decisive move below the 1.2980-90 area points to a revisit to the September low of 1.2822. For today, USDCAD support is at 1.3010, 1.2980 and 1.2960. Resistance is at 1.3090 and 1.3120.

Today’s Range 1.2980-1.3080

Chart: 30-minute

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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