Canada Retail Sales slipped in June, falling 0.2%, which was precisely as predicted. According to Statistics Canada, “on a quarterly basis, retail sales were up 1.0% in the second quarter following a 0.5% decrease in the first quarter. In volume terms, retail sales increased 0.9% in the second quarter.”
USDCAD chopped about in a 1.3009-1.3038 range upon the release of the Retail sales data, but prices quickly reverted to pre-data levels.
The overnight price action was a little more robust. USDCAD inched lower, undermined by the slightly positive risk tone stemming from gains on Wall Street and the onset of the US/China trade talks today. Traders continue to wrestle with the hawkish Bank of Canada interest rate outlook and concerns about the health of the Nafta renegotiations. The US government delivered another blow to Canada trade yesterday, announcing 25% tariffs on the import of welded steel pipes which are used in pipeline construction. Mexico and the US are on the verge of announcing a bilateral trade agreement, and Canada is outside, looking in.
Defendants at the Nuremberg trials at the end of World War ll explained their actions by saying “I was just following orders.” President Trump’s lawyer Michael Cohen used the same excuse. Yesterday he pled guilty to eight criminal charges and said he made payments “for the purpose of influencing the election, acting under the direction of “the candidate.”
The news distracted and entertained traders in an otherwise dull overnight FX session. There wasn’t much in the way of actionable economic data except in Australia and New Zealand. The US dollar sell-off following Trump’s haranguing of the Fed appears to be running out of steam.
EURUSD traded in a 1.1554-1.1601 range with resistance seen in the 1.1610-20 area. GBPUSD tracked EURUSD moves, but gains were capped below the 1.2920-70 resistance zone. “No-deal” Brexit fears will continue to cap gains.
NZDUSD jumped to 0.6719 from 0.6775 after better than expected Retail Sales data. (Actual 1.1% vs forecast 0.4%) The rally nearly filled the Aug 8 gap between 0.6720-and 0.6745 caused by the dovish RBNZ statement. Prices have since retreated due to lingering US/China trade war fears.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.3040 looking for a break of support in the 1.2990-1.3005 area to extend losses to the 1.2940-60 support area. A break of the lower bound targets 1.2850. A break above 1.3040 shifts the focus back to the 1.3150 area. For today, USDCAD support is at 1.2990 and 1.2940. Resistance is at 1.3040 and 1.3080
Today’s Range 1.3010-1.3060