USDCAD Range 1.2957-1.3055    

USDCAD traded higher in early Asia on news that USDCNY fixed 1.6% higher.The initial move proved wrong and USDCAD started to decline, accelerating on the break of 1.3105 and then the after-burners kicked in on the break of 1.3060.  From there it was a straight shot down to just below 1.2960 before profit takers emerged to drive the currency pair above 1.3000 again.

Elsewhere, the US dollar retreated across the board against the G-10 currencies with CHF gaining 1.55%.There isn’t any clear reason for the moves. China maintains the devaluation was a one-off but it appears the rest of the world is a tad sceptical. More than likely, a lack of top tier data from the US and increased uncertainty around a September rate hike led to long US dollar positions getting cut.

USDCAD traders need to keep their eye on the ball, or more specifically, WTI prices. WTI is still in a downtrend and not far from the 2015 low. The International Energy Agency released a forecast stating that the oil oversupply will persist through 2016.

Technical Outlook

The intraday technicals are bearish while trading below 1.3030 with the break of support at 1.2960 opening the door for a deeper correction to 1.2800-50. A move back above 1.3030 would negate the downside pressure.  For today, USDCAD support is at 1.2940, 1.2910 and 1.2880.  Resistance is at 1.3010 and 1.3040.

Today’s Range 1.2960-1.3030

Chart: USDCAD hourly with intraday support                 Larger Chart