[DanRath]

Oil prices continue to grind higher, the commodity currencies are generally outperforming today (after the RBNZ left rates on hold and Australian employment data came in better than expected) and the USD tone remains generally a little defensive this morning as we get going – though it remains to be seen if that is sustained. But after stalling out in the mid 1.11s here late yesterday and slipping steadily overnight, USD/CAD seems to be a little reluctant to push much lower at the moment despite what looks to be a rather CAD-positive backdrop. Governor Carney is speaking at the International Economic Forum of the Americas in Montreal at 13.50ET on “Rebalancing the Global Economy” (there will be a press
conference afterwards at 14.45ET and the speech will be posted on the BoC website at 13.35ET). The market will be tuning in to hear if there is any higher level of concern at the BoC regarding the strengthening of the CAD following yesterday’s weaker than expected trade data. We doubt the BoC will be especially sensitive to one piece of data though and, if there is any reference to the CAD at all (Governor Carney has not spent too much time on the currency in previous public comments), it may well be limited to a broad reiteration of the BoC’s policy announcement statement (if sustained, CAD strength “could” undo some of the good things happening in the economy). We remain generally negative USD/CAD and still look to sell rallies; short term price action does suggest a consolidation in the underlying trend lower remains in force though and good support from the low 1.10s in London dealing suggests limited downside for funds in the next few hours perhaps. Resistance is in the mid/upper 1.11s as remaining quite firm though and if Governor Carney fails to wave a big red flag on the currency, we should see USD/CAD push lower again.