USDCAD TECHS: Heading South

• RES 4: 1.3192 1.00 proj of the Apr 5 - May 12 - Jun 8 price swing
• RES 3: 1.3113 High Nov 23 2020
• RES 2: 1.3079 High May 17 and a bull trigger
• RES 1: 1.2917/3017 High Jun 27/23
• PRICE: 1.2864 @ 16:56 BST Jun 29
• SUP 1: 1.2819/2801 Low Jun 28 / 50-day EMA
• SUP 2: 1.2732 61.8% retracement of the Jun 8 - 17 rally
• SUP 3: 1.2681 Low Jun 10
• SUP 4: 1.2518 Low Jun 8 and key support

The USDCAD outlook is bullish, with the corrective cycle stalling on Tuesday as the pair finished the day closer to Tuesday’s high. In candle terms, yesterday is a doji pattern and this points to a possible short-term bullish reversal and the end of the recent corrective pullback. A resumption of strength would refocus attention on resistance at 1.3079 the Jun 17 and a bull trigger. Firm support lies at 1.2801, the 50-day EMA.

Rates trading near top end of the range after the bell, whippy first half trade gave way to better buying in the long end into midday - bonds trading sideways through the second half, USU2 +1-21 at 136-26. Despite the drop in nominal US yields, real yields sit at 69bps, up more than 10bps since early Monday levels and the highest since Mar-2019. Yield curves mixed after the bell, 2s10s -1.605 at 4.183, well off early 7.177 early high, 5s30s +1.365 at 5.776.

• Early domestic and foreign data in play. Rates gapped higher overnight following much weaker than expected German CPI for North Rhine (0.1% MoM; EST 0.9%; 7.5% YoY; EST 8.1%), blipped higher after prelim German CPI gained less than anticipated (+0.1% MoM vs. +0.4%).
• Tsys resumed march higher after Q1 GDP declines slightly more than expected (-1.6% vs. -1.5% est).
• Fed Chair Powell at ECB forum in Sintra: Hard to hike rates "without a hit to growth" or boosting unemployment. “There’s no guarantee that we can do that,” Powell said. “It’s something that’s going to be quite challenging.” The Fed raised rates by 75 basis points this month and has signaled substantial further increases to come.
• Cross asset: US$ extended on Tuesday’s bounce and the USD index has comfortably breached last week’s highs, rising a half a percent on the day.
• Crude oil prices are ending a three-session rally by sliding circa 2% despite US crude inventories falling by more than expected in EIA data, as growth concerns mount with Treasuries rallying solidly.