The US dollar is on the defensive. The greenback was still reeling from Friday’s disappointing Retail Sales and inflation data when New York opened, after a subdued overnight session. It didn’t get any relief from today’s New York Empire State index. It dropped to 9.8 from 19.8 in June. The US dollar slipped on the news even though this data series is third tier, and rarely having an impact.
EURUSD had dropped to the overnight low of 1.1434 in Europe and ticked higher into the open. This morning’s data just brought it to within spitting distance of the Asia peak of 1.1474.
Sterling consolidated Friday’s gains inside a 1.3069-1.3111 range. Traders ignored reports of Tory Party disharmony and a leaked email suggesting France was for a “hard” Brexit.
Japan was closed for Marine Day and USDJPY was adrift in a 112.41-112.76 band.
China data beat forecasts. Q2 GDP rose 6.9 percent. (forecast 6.8%, q/q) Industrial Production was an impressive 7.6 percent (forecast 6.5% y/y) and Retail Sales were 11.0 percent (Forecast 10.6%)
The China data underpinned the antipodean currencies in Asia. However, they declined during the European session although both currency pairs remained well above Friday’s lows before the US CPI and Retail Sales reports. The European losses were recouped in New York trading.
Oil prices stayed firm. WTI peaked at $46.86/b overnight and has since drifted lower. Prices are supported by last week’s US crude inventory drawdown and Friday’s Baker Hughs rig count report that showed the number of new rigs only increasing by three.
USDCAD is consolidating Friday’s gains in a 1.2638-1.2672 range. A hawkish Bank of Canada, a doveish Fed and firm oil prices have given the Loonie wings. However, the sharp drop in IMM speculative CAD short positions, reported on Friday suggests that further USDCAD losses may be limited in the short term.
USDCAD Technical outlook:
The USDCAD technicals are bearish looking for further losses to 1.2465. However, the size of the move since last week, argues for a bit of consolidation in a 1.2640-1.2740 range. Coincidently, Friday’s USDCAD drop halted at 1.2638, the 50% Fibonacci retracement level of the 2014-2016 range on the weekly chart A decisive break of this level targets the 61.8% level of 1.2150
For today, USDCAD support is at 1.2640 and 1.2610. Resistance is at 1.2690 and 1.2720.
Today’s Range 1.2640-1.2690