Forex Investment and Currency Trading

• Few directional or material deal flows noted in USD/CAD during the overnight session.
• Prices drift lower in London due to broader-based USD weakness.
• Resistance at 1.0066 and 1.0080 is expected to attract short-term selling pressure for a pullback to support at 1.0027 and 0.9998.

Overnight FX Trading Activity:

Asia: USD/CAD traded lower during a quiet overnight session, as broad-based USD weakness was the main theme for the session. There were no deal flows of note during the Asian trading session, with USD/CAD opening at 1.0057-62 and moving to a high of 1.0074.

London: An offered tone developed during the London trading session as broad-based USD weakness provided the market with direction. With EUR/USD testing the 1.5900 level, light interbank selling pressure pushed USD/CAD from 1.0066 to 1.0036 in quiet trading.

Limited Event Risk to Begin the Week
There are no data releases scheduled in Canada today, leaving the June U.S. leading indicator data as the only event risk for the market to digest. Expectations are for a print of -0.1%m/m, which would be a decline from the +0.1%m/m result reported in May. The data is unlikely to have a huge impact on USD/CAD, with broader moves in equity and commodity markets still important factors to consider. With equities poised to open higher after better than expected earnings from Bank of America (72 cents vs. expectations of 54 cents) and crude oil up $1.64/bl to begin the day, USD/CAD is expected to attempt to move toward the parity area today.

Short-Term Outlook: Resistance at 1.0066 Expected to Attract Selling Interest
Resistance at 1.0066 and 1.0080 is expected to attract selling interest today for an attempt to pierce initial support at 1.0027 and extend losses toward 0.9998.

Medium-Term Outlook: Valuations Suggest That Range-Trading Scenario Will Remain
The daily studies have now moved back in to oversold territory. This indicates that moves below support at 0.9991 will not be sustained and the 0.9724-1.0343 trading range that has been in effect since last November is set to remain in place for the time being.

AUD/CAD The bullish view is retained for this cross and is expected some additional USD weakness after a short-term retracement in the greenback.

Short-Term Technical View: Hourly USD/CAD Candle Chart -Downtrend Remains in Place

The multi-month range trading scenario is expected to remain in place for USD/CAD, as the oversold nature of the daily valuations suggests that moves below support at 0.9941 will not be sustainable. USD/CAD appeared to be on course to pierce support at 0.9991 last week and extend losses toward the 0.9890 area. However, this level held as the daily studies moved in to oversold territory. For technicians, the oversold nature of the studies indicates that USD/CAD is expected to remain in the 8-month trading range that is defined by support at 0.9724 and resistance at 1.0343/1.0378. The support at 0.9991, 0.9890 and 0.9724 is expected to attract renewed buying interest for a test of resistance at 1.0072. A daily close above this level would then project additional gains to 1.0236.