Range 1.3139-1.3278 (Oct 7-Oct 11 6:00 am PDT
The Canadian dollar has outperformed its G10 counterparts since closing on Friday. USDCAD plummeted from Monday’s peak of 1.3277 to a low of 1.3138 on news that Russia had announced it was willing to join in Opec’s effort to stabilize the oil market. Russia’s President, Vladimir Putin, declared that a production freeze or a production cut were likely the only right decisions to maintain energy sector stability.
WTI soared from $49.22/barrel in Asia to $51.58 in New York. It has since drifted back to $50.97/b.
The intraday WTI technicals are bullish while prices are trading above $49.60, looking for a break of $51.90 to extend gains to $53.90.
USDCAD recouped some of Monday’s losses overnight climbing back to 1.3232 from 1.3138, following a profit-taking retreat in WTI prices, which has since ended.
The US dollar is in demand. In Asia, NZDUSD was sold when RBNZ Assistant Governor John McDermott gave a speech warning of further easing ahead. NZDUSD dropped from 0.7141 to 0.7057.
AUDUSD ignored domestic data and traded lower following remarks in Sydney, by Chicago Fed President Charles Evans, that he would be “fine with the Fed raising rates in December.
In Europe, a better than expected Eurozone ZEW Economic Sentiment survey (Actual 12.3 vs. forecast 6.3) gave EURUSD a short-lived pop. EURUSD is currently sitting just above key support in the 1.1050-60 area that if broken will extend losses to 1.0910.
GBPUSD remains under pressure due to Brexit negotiation fears.
The prospect of a US rate hike in December (odds are now at 64%, a positive spin to last Friday’s nonfarm payrolls report (rise in hours worked and rise in hourly earnings) and a rise in bond yields has invigorated US dollar bulls.
There isn’t any major US data of note today which suggests that the overnight bullish US dollar trading theme should prevail. USDCAD traders will be torn between the rising US rate outlook and oil prices. If WTI consolidates its recent gains USDCAD may drift higher toward resistance in the 1.3280 area. Canadian Housing Starts data were an impressive 220,600, well above the 190, 000 forecast and provided some additional support to the Canadian dollar.
USDCAD technical outlook.
The intraday USDCAD technicals turned bearish after the Canadian employment data when prices crashed through 1.3235 which represented the minor October uptrend. As a result, the 1.3250-60 area will revert to resistance. The minor uptrend from September 22 is intact while prices are above 1.3120 A break above 1.3314 (38.2% Fibonacci retracement level of the 2016 range stands will extend gains to 1.3500. For today, USDCAD support is at 1.3190 and 1.3130. Resistance is at 1.3250 and 1.3290