Canadian’s are shopping. At least that’s what this morning’s Retail Sales data implies. Statistics Canada reported that April Retail Sales rose 0.8% spread across 9 out of 11 subsectors. The forecast was for only a 0.2% increase. Excluding automobiles, Retail Sales rose 1.5%, handily beating the 0.7% forecast.
USDCAD plunged, falling from 1.3310 to 1.3255 on the news
Oil prices also contributed to the USDCAD decline. WTI rose from the overnight low of $42.29 to $42.90 in early New York trading. Prices have since slipped back to $42.72/b.
A lack of European economic data left EURUSD adrift in a narrow 1.1155-1.1176 trading range which is still intact in New York trading. Even rate hike musings from ECB Chief Economist Praet did not have any effect.
Across the English Channel, Sterling was just as quiet as the euro in what may just be fatigue from conflicting interest rate comments from the Bank of England, politics, and Brexit.
It was a good day for Kiwi bulls. NZDUSD gapped higher, from a low of 0.7215 to 0.7270. The RBNZ left rates unchanged at 1.75% (no surprise). The statement was neutral and said that policy would remain accommodative. The rally was triggered because some players had sold NZDUSD expecting some pushback on the exchange rate because of the rally in the NZD trade weighted index from the earlier meeting. AUDUSD did not trade with any enthusiasm.
It wasn’t such a good day for USDJPY bulls, at least in Asia. USDJPY dropped from 111.42 to 110.96 in Asia on a combination of weak oil and rising lower US Treasury yields. The move was reversed in Europe and USDJPY is presently trading at 111.24 in New York.
Range trading will be the name of the game today. The lack of US data and fresh policy direction will ensure a fairly dull day.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish following the failure to break above resistance in the 1.3345-60 area and the subsequent decline below 1.3320. That suggests the recent rally was merely a correction inside the May downtrend line. A break above 1.3360 will extend gains to 1.3420. For today, USDCAD support is at 1.32500 and 1.3210. Resistance is at 1.3320 and in the 1.3345-60 area.
Today’s Range 1.3220-1.3310
Chart: USDCAD 30 minute