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Bearish Bias For USDCAD

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The US dollar retreated in overnight markets. The greenback has fallen against the G7 currencies, except against the Japanese yen in a bout of pre-weekend profit taking.

The Bank of Japan interest rate decision and policy statement was the story in Asia.  The BoJ left interest rates unchanged, as expected and left the JGB target at 0%.  USDJPY rallied on the news rising from 110.85 to 111.37 where it sat at the New York open. The Nikkei closed with a 0.56% gain.

AUDUSD clawed back some of Thursday’s losses, rising from 0.7575 to 0.7607 at this morning’s open. NZDUSD tracked AUDUSD higher.

EURUSD bounced from the overnight low of 1.1140 to 1.1180 on profit taking.  Eurozone May inflation was “as expected” (Actual 1.4% vs. forecast 1.4% y/y) which supports Mario Draghi’s doveish view. EU officials solved the Greece debt relief problem, for the time being.  They gave Greece another EUR8.5 billion and then said “talk to you later”.

EURUSD traded sideways in Asia but sank to 1.1153 in Europe.  The prospect of another US rate hike in 2017 while the ECB policy stays unchanged weighed on the currency pair.

GBPUSD traded sideways inside a 1.2752-1.2784 range, supported by the prospect that the Bank of England could raise interest rates as early as August.  Of course, that is assuming that the Brexit negotiations, which start next week, go smoothly.

Oil prices are still under pressure.  WTI traded in a narrow $44.32-76 band, weighed down by bearish technicals and the supply/demand imbalance.

USDCAD traded quietly but maintained its bearish bias.  The Deputy Governor’s signal of a hawkish policy shift on Monday, followed by Stephen Poloz’s confirmation of her remarks, drove USDCAD below the 100 and 200 day moving averages and hung a target on the February low of 1.2965.

The prospect of another US rate hike should put a flor under US dollar weakness, especially if today’s US Housing Starts, Building Permits and Michigan consumer confidence reports exceed forecasts.   However, the next FOMC meeting isn’t until July 25-26, and it is a statement only meeting, so a rate hike is unlikely then.

For the rest of the day, US dollar direction will be driven by equity and oil price swings as well as the political drama from Washington.

Overnight Ranges

16-Jun-17 Open-6 am EDT High Low
USDCAD 1.3250 1.3270 1.3240
EURUSD 1.1172 1.1182 1.1140
USDJPY 111.31 111.37 110.85
GBPUSD 1.2766 1.2784 1.2752
USDCHF 0.9738 0.9755 0.9729
AUDUSD 0.7605 0.7608 0.7577
NZDUSD 0.7238 0.7239 0.7201
USDMXN 17.9885 18.0855 17.9686
WTI   44.61 44.76 44.32

 

USDCAD Technical outlook:

The intraday USDCAD technicals are bearish while prices are below 1.3290 looking for a break of support at 1.3165 to extend losses to 1.2965. The short term technical out look is bearish while prices are below 1.3400 the downtrend line being guarded by resistance from the 100 and 200 day moving averages which are 1.3382 and 1.3336., respectively.  For today, USDCAD support is at 1.3180 and 1.3160.  Resistance is at 1.3280 and 1.3340.

Today’s Range 1.3180-1.3280

Chart: USDCAD 2 hour

usdcad-2-hour-chart

 

 

Further Reading

 

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

New Year Optimism Retreats on US/Iran Tension

The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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