The Canadian dollar took it on the chin this morning. Canada Retail Sales decline 1.2%, m/m in April lower than the 0.0% forecast and well below the 0.8% increase in March, Statistics Canada blamed the drop on lower sales of motor vehicles and parts, and on poor weather in many parts of the country.
The second blow to the Canadian dollar came at the same time. The May CPI report showed inflation fell 0.1%, m/m. The forecast was for a 0.2% gain. The year over year data showed an inflation gain of 2.2% which was below the 2.5% that was expected. Core CPI also missed forecasts, rising 1.3% (forecast 1.4%, y/y)
USDCAD exploded higher, spiking to 1.3380 from 1.3268. Intraday profit taking has pushed prices down to 1.3345 as of 6:00 am PDT. The US dollar added to yesterday’s losses overnight. EURUSD rose from 1.1602 to 1.1674 but retreated to 1.1649 in early New York trading. German Manufacturing PMI (June- Preliminary) dipped to 55.9 from 56.9 previously. Eurozone PMI Manufacturing PMI at 55.0, was unchanged. Italian pollical issues are still a negative for the single currency as are bearish technicals while prices are below 1.1800.
The US dollar slid in overnight trading. EURUSD rose from 1.1602 to 1.1674 but retreated to 1.1649 in at the New York open. German Manufacturing PMI (June- Preliminary) dipped to 55.9 from 56.9 previously. Eurozone PMI Manufacturing PMI at 55.0, was unchanged. Italian pollical issues are still a negative for the single currency as are bearish technicals while prices are below 1.1800.
GBPUSD climbed to 1.3313 from 1.3242 and is trading around 1.3295 as this is being written, Profit taking after the significant drop in GBPUSD since April could extend gains to the short-term downtrend line at 1.3395. Fears of a “hard” Brexit may limit the topside.
USDJPY bounced within a 109.87-110.20 range. Prices are in the middle of this week’s 109.55-110.75 trading band. Japan CPI rose 0.7%,y/y in May well above the 0.3% forecast. Soft US Treasury yields and global trade tensions cap USDJPY gains.
The 174th Opec meeting is in full swing in Vienna. Oil prices have rallied on reports that Iran may agree to a production increase.
There isn’t any meaningful US data due today.
USDCAD Technical Outlook
USDCAD has been in an uptrend since January and the uptrend is intact while prices are above 1.2930 (weekly chart) A break above 1.3380, the downtrend line from January 2016 targets 1.3550. For today, the intraday technicals are bearish while prices are below 1.33056, lookingg for a break of minor support at 1.3250 to extend losses to 1.3210.