Overnight Range 1.3076-1.3126
USDCAD rode a kiddie roller-coaster overnight, trading in a choppy but narrow range due to oil prices, China data, US rate hike sentiment and uncertainty ahead of today’s Bank of Canada policy meeting.
The Asia market started with NZDUSD getting a lift as traders reacted to the GlobalDairyTrade Auction results released much earlier. That move didn’t survive the European session. AUDUSD also rallied early but erased all its gains when key China economic data was released.
China Retail Sales rose 10.7% beating the 10.6% forecast but that news was offset by Industrial Production. (Actual 6.1% vs. forecast 6.4%). The Q3 GDP report showed a 6.7% gain which was expected.
USDJPY declined from 103.95 to 103.25 on rumours that there wouldn’t be any easing announced at the November BoJ meeting.
In Europe, UK employment data didn’t deliver any surprises. The 3 month Unemployment Rate was unchanged at 4.9%.
GBPUSD didn’t react to the employment data but rallied on reports that a UK government lawyer suggested that any Britain/EU Brexit deal would have to be ratified by parliament.
EURUSD traded sideways just below the 1.1000 level for the overnight session.
WTI oil prices are flirting with $51.00/b. Yesterday’s end of day decline of 2.7 million barrels in US Crude invesntories as reported by the American Petroleum Institute, triggered the WTI rally from $50.25/b to the overnight high of $51.06.
Prices were also supported by news that China announced a decline in September oil production and from from comments by Saudi Arabia Oil Minister Kalid Al-Falih . He said thatt other oil producing nation were joining Opec with producion cuts.
The Bank of Canada Monetary Policy Report and policy statement is the major event for Canadian markets. No one expects a change in the Bank Rate (currently 0.5%) but there is a growing chorus expecting a doveish leaning statement. Some believe that the recent changes in mortgage eligibility rules have given Mr. Poloz and company a green light to raise the risk of a rate cut without overheating the housing market. At the same time, a doveish BoC is the expected outcome suggesting that disappointment could lead a Canadian dollar rally.
US Housing Starts dropped 9.0% in September but any negativity was tempered by the 6.3% jump in building Permits for the same period. FX markets did not react to the news.
USDCAD technical outlook.
The intraday USDCAD technicals are bearish. USDCAD is in a minor downtrend channel that began at 1.3235 and is currently bound between 1.3130 at the top and 1.3020 at the bottom. The bearish sentiment is supported by the break of the September trend line at 1.3180. A break below 1.3060 opens the door to 1.2990-1.3000. A break above 1.3130 would lead back to 1.3210 For today, USDCAD support is at 1.3060 and 1.3010. Resistance is at 1.3130 and 1.3190.
Today’s Range 1.3020-1.3120