USDCAD Overnight Range 1.3100-1.3155
ECB president, Mario Draghi was expected to deliver a doveish statement. He did and EURUSD collapsed as if the news was a surprise. More than likely, traders only paid lip service to the idea of a doveish Draghi and waited to his speech to either cut longs or get short. EURUSD was hugging 1.1310 before Mr. Draghi and plunged to 1.1160 afterwards. Mr. Draghi said that another cut in the deposit rate was being discussed (it’s already negative). His comment that the ECB is in work and assess mode was seen as an indication that stimulus action will occur in December.
Overnight, there wasn’t a whole lot of calm before the ECB storm this morning. The Skandia’s and Euro hugged yesterday’s closing levels but the other currencies did not. The Antipodean’s were antsy and Kiwi was the antsiest, apparently getting a boost from the Finance Minister’s comments on China. AUDUSD was under pressure following another bank raising mortgage rates, which could force the RBA to cut the OCR.
European markets were choppy although EURUSD stayed in a narrow range. Sterling shone on better-than-expected Retail Sales data.
The Canadian dollar performed admirably in an otherwise volatile, post ECB session but that is after the Loonie’s less than stellar performance yesterday. Retail Sales beat forecasts, rising 0.5% in August which provide a modicum for support to the currency. The outlooks for USDCAD is muddled. It is almost smack dab in the middle of the 1.2840-1.3455 trading range and being pulled in both directions, at once. On one hand, the BoC Monetary Policy Report was doveish, downgrading growth and inflation forecasts while on the other hand, the new Liberal government may provide the Loonie with a lift on its infrastructure spending plans. As usual oil is the wild card.
USDCAD technical outlook
The intraday technicals are bullish while trading above 1.3000 supported by the break of key resistance in the 1.3050-70 level. Minor resistance is seen in the 1.3140-50 area, which if broken, will extend gains to 1.3220 and target the September high of 1.3455. A break below 1.3000 would negate the upside pressure put 1.2850 back in focus. For today, USDCAD support is at 1.3080 and 1.3040. Resistance is at 1.3150, 1.3180 and 1.3220.
Todays forecast range 1.3070-1.3150
Chart USDCAD 1 hour with uptrend and resistance – Larger Chart