US July Retail Sales beat the forecasts and traders beat US dollar bears.  Retail Sales were forecast to rise 0.4%, month over month, a big improvement from the 0.2% drop in June.   Instead, they rose 0.4% and with the bonus of an upward revision in the June data (revised to +0.3%).  Import and Export prices also increased as did the Empire Manufacturing Index (Actual 25.2 vs. forecast 10.0)

Yesterday, New York Fed President William Dudley said that he expected one more rate increase in 2017 if it was supported by the data.  His comment and today’s data have fanned the embers for additional Fed tightening.

EURUSD was already on the defensive in early New York trading.  Today’s data sent it into retreat, and the single currency fell from 1.1755 to 1.1694.

Sterling dropped from an overnight top of 1.2968 to 1.2855. UK July CPI data was unchanged from June but a tic below the forecasts which led to GBPUSD selling.  The drop was extended by today’s US data.  In Brexit news, the UK is hoping to keep tariff free trade going for a couple of years after Brexit, raising hopes of a “soft” Brexit.”

USDJPY unwound a few days’ worth of safe haven losses.  The apparent easing of tensions between North Korea and the US, slightly increased Fed tightening odds and strong US data drove USDJPY from the Asia low of 109.61 to 110.83 in New York trading.

AUDUSD rallied on the upbeat minutes from the RBA meeting.  Those gains evaporated under the broad dollar strength and soft commodity prices.  AUDUSD dropped from 0.7875 to 0.7826

A drop in WTI oil prices from $49.15 yesterday at mid-morning to $47.37 overnight, supported USDCAD gains.  Yesterday’s news of a decline in crude imports by China triggered the oil free-fall, while broad US dollar strength has underpinned USDCAD.

The rest of the day will see the US dollar trying to add to this mornings’ gains.  However, it should be noted that EURUSD, GBPUSD, and USDJPY are all inside their two-week ranges.  The commodity currencies are inside their one month range.

USDCAD Technical outlook:

The intraday USDCAD technicals are bullish while prices are above 1.2700.  A break of the strong resistance in the 1.2750-70 area will extend gains to 1.2865 and then 1.2980.  A move below 1.2670 would negate the upward bias and argue for some 1.2620-1.2750 consolidation.  For today, USDCAD support is at 1.2705 and 1.2680.  Resistance is at 1.2770 and 1.2830.

Today’s Range 1.2715-70

Chart: USDCAD  1 hour