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CAD strengthens as Canadian GDP comes in higher than expected

Posted on: March 31, 2017

It looked like USDCAD might finally take a run at the post FOMC low of 1.3265 for a while yesterday before buyers stepped in and propelled the pair back toward 1.3350. Euro weakness continued as we saw EURUSD break back below key levels to find a 1.06 handle again. Banxico raised interest rates by 25 basis points as expected, and barring an epic collapse MXN should be the best performing against the USD in Q1 2017. Of course, the tough talk on trade still remains so it might be a short lived title.

Overnight Japan was the country to watch if you had a thing for data. The unemployment rate and CPI came in stronger than expected while housing starts and household spending underwhelmed. This morning the big print to watch was Canadian Q4 GDP, which came in better than expected (0.6% vs 0.3%) which has CAD strengthening. South of the border, we saw personal income come in right on the screws while personal spending was a tick lower than expected. It could be a choppy session, with quarter-end flows and Japanese year-end flows distorting the market. We also have speeches from Fed members Kashkari and Bullard to watch for heading into the weekend.

For those watching USDCAD, the strong GDP print this morning has us pushing towards a 1.32 handle. WTI is trading back above $50, if only slightly, which is also helping CAD outperform on the crosses. The 100-day moving average sits at 1.3294 with yesterday’s low of 1.3280 right behind it. For USD buyers keep putting bids in hoping to catch the benefit of some stop hunting driving things below the post March FOMC low of 1.3265. For USD Sellers, the key level to watch is that 1.3260/70 band, if that breaks it opens up for a test lower so it may be worth putting a stop loss down below while looking for more attractive levels.

  • Yesterday’s NA Range 1.3278 – 1.3352
  • Asia Overnight Range 1.3331– 1.3347
  • London Overnight Range 1.3368 – 1.3291

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