USDCAD New York Open 1.3376-79    Overnight Range 1.3354-1.3425

USDCAD soared to 1.3425, from 1.3390, after Canadian Retail Sales and Inflation reports were released. January Retail Sales shrank 0.3%, well below the forecast for a gain of 0.4%.  Making matters worse, the December result was revised lower to -0.3% from 0.1%.   It was the third consecutive month of declines with the bulk of the drop blamed on lower motor vehicle sales.

Source: Statistics Canada

Canadian inflation rose 1.5% y/y in February, above the 1.4% predicted and it would have risen 2.1% if gasoline prices were excluded.  That result took some of the sting out of the Retail Sales numbers, and USDCAD retreated to 1.3405 shortly afterwards.

The UK’s wish for an orderly exit from the European Union is now a wish for an exit with dignity. Prime Minister Theresa May went cap in hand to the 27 leaders of the EU, begging for a three-month extension.  She got sixty-two days and only if British MP’s approve May’s Brexit deal in a third vote, next week.  If they don’t, the Article 50 extension is only until April 12.

Yesterday, GBPUSD collapsed on the rumours that the EU wouldn’t give Ms May a three-month extension, falling from 1.3170 to 1.3000.  However, profit-taking in the afternoon lifted prices to 1.3100 which climbed further until early in the European session when sellers emerged driving prices down to 1.3083.

EURUSD plunged during the European session, getting a helping hand from weaker than expected German and Eurozone Manufacturing PMI data. (Eurozone Mar PMI Actual 47.5, vs forecast 49.5 and Feb. 49.3) The data suggests the economy is slowing and endorses ECB President Mario Draghi’s dovish bias.  EURUSD plunged from 1.1376 to 1.1289 and opened in New York at 1.1304.

USDJPY traded sideways in Asia and dropped from 110.88 to 110.50 at the New York open, weighed down by soft 10-year US Treasury yields, which are at 2.503%.  AUDUSD and NZDUSD dipped in Europe and opened in New York at the overnight low undermined by broad US dollar strength.

WTI oil prices have declined from yesterday’s peak of $60.33/barrel in what may just be profit taking ahead of the weekend.

USDCAD Technical Outlook

The intraday USDCAD technicals turned bullish with yesterday’s break above 1.3340 and is in a steep uptrend while prices are above 1.3360, targeting 1.3430.  A break above 1.3430 will extend gains to 1.3660.  A move below 1.3360 will lead to 1.3320 and then 1.3280. For today, USDCAD support is at 1.3360, 1.3320 and 1.3280.   Resistance is at 1.3430 and 1.3480.

Today’s Range 1.3340-1.3430