Loonieviews 30Sep16

Month end pressures undermine greenback

USDCAD Open (6:00 am) 1.3151-55 Overnight Range 1.3142-1.3192 30 Sept 16


NOTE: This chart represents gain (or loss) of G10 currencies vs the US dollar from NY close (4:00 pm) to Sept. 30, 6:00 am EDT

The Canadian dollar was an after-thought in overnight trading. USDCAD drifted sideways in a fairly narrow 0.0050 point range. That wasn’t the case for the Australian or New Zealand dollars. AUDUSD declined steadily while NZDUSD rode a roller-coaster. Month-end and quarter-end portfolio rebalancing flows may be behind part of the moves. USDJPY spiked to 101.75 from 100.90 in early Asia trading but that move was revered early in the European session.

FX markets were very active in Europe. EURUSD remained true to form and traded in a tight band. The decline from 1.1225 to 1.1170 may be attributed to on-going concerns about Deutsche Bank. There was a lot of Eurozone data including CPI and German Retain Sales but it didn’t have much if any impact on trading. GBPUSD is back below 1.3000.

Oil prices declined steadily overnight due to a mix of profit taking and a bit of skepticism over the Opec deal, with WTI reaching a low of $47.00. It bounced to $47.64 in early New York trading.

The bounce in WTI hasn’t really translated into Canadian dollar strength this morning. USDCAD traders will key in on this morning’s GDP report. Weaker than expected data (forecast 0.3% in July) will fuel additional USDCAD gains. There is a lot of US data as well which will feed US dollar bulls if it beats expectations.

USDCAD technical outlook.

The intraday USDCAD technicals are bullish while trading above 1.3060 supported by the break above resistance at 1.3120 which keeps the focus on a retest of the 1.3280 area. A break below 1.3060 argues for a revisit with support in the 1.2980-1.3000 area. For today, USDCAD support is at 1.3140, 1.3110 and 1.3060. Resistance is at 1.3200, 1.3240 and 1.3280

Today’s Range 1.3110-1.3190

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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