EUR or USD strength is a necessitating component of commodity bloc weakness, but neither showed any signs of returning during the London morning. As such, AUD, CAD and NZD tones were generally buoyant again, albeit modestly so.
The fact that USDCAD is flashing some important bearish signals cannot be ignored. These include the bearish fractal (daily) earlier in the week, the break of trendline support (from the Feb 19th low) and the 12-26 MACD. For those reasons, the 1.105-1.109 range should now provide some very good resistance over the near-term, and that resistance area may extend straight through to ADP and NFPs next week. A surprise easing from the ECB next week may also prevent USDCAD topside somewhat, by weighing on EURCAD.
At this stage, there doesn’t really seem to be a logical reason for a move below 1.100 support, especially after 5 successive days of lower USDCAD closes. Even though US data have been tepid, the tone of the last FOMC and the impending March NFPs report next week must count for something. We expect a re-test of the 1.1035-1.105 range before the end of the session (but after the US data are out of the way), but we wouldn’t completely rule out a close at or slightly below the open (1.1031).
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