Overnight Range 1.2864-1.2918
NOTE: This chart represents gain (or loss) of G10 currencies vs. the US dollar from NY close-July 14 (4pm) to NY Open July 1, 6:00 am PST
The Canadian dollar started the day close to its best levels of the week but virtually unchanged from yesterday’s close. This morning’s better than expected US Retail Sales data sparked a bit of profit taking but the intraday downtrend remains intact. Canadian Manufacturing shipments were slightly lower than expected but they were expected to be soft so the impact on the currency was negligible.
The Bank of Canada’s rather upbeat outlook for Q3, on Wednesday, caused USDCAD bulls to re-evaluate their view which was exacerbated by the decline below 1.2970. Better-than-expected China data overnight, which included Q2 GDP rising 1.8%, q/q and 6.7%, y/y helped maintain the negative tone to USDCAD.
Risk-on sentiment was evident in Asia. The China data gave both AUDUSD and NZDUSD a boost although neither pair could hold onto the gains. Nevertheless, the AUDUSD uptrend that has been intact since July 6 remains intact while the NZDUSD remains under pressure ahead of next week’s RBNZ economic update. The prospect of another bout of stimulus in Japan led to USDJPY extending this week’s rally through 106.00 to touch 103.33.
The European session was somber. Another terrorist attack in France draped a pall over markets. Still EURUSD edged higher. Eurozone June CPI data came in as expected. (Actual 0.2%, Core 0.9%). GBPUSD had another strong day, rising to 1.3480 in Asia before dropping back to 1.3337 in Europe. The Bank of England Chief Economist urged policy makers to deliver a stimulus package next month which may have contributed to Sterling’s retreat.
The US data releases this morning (Retail Sales, CPI,) are a little less important than usual because the chances for a US rate hike in the next few months are still slim to none, in part due to concerns about the impact of Brexit.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish while trading below 1.2980, a downtrend line which is being guarded by another, albeit, minor line that remains intact while prices are below 1.2910. The target is 1.2835. A daily close below 1.2835 snaps the April uptrend line and warns of further weakness to 1.2650. A break above 1.2910 would risk a retest of 1.2980. For today, USDCAD support is at 1.2860, 1.2835 and 1.2770. Resistance is at 1.2910, 1.2960 and 1.2990
Today’s Range: 1.2860-1.2940
Chart: USDCAD 30 minute