USDCAD Overnight Range 1.2925-1.3031                           

The Loonie took flight on surprisingly strong Retail Sales data in early morning trading. January Retail Sales jumped 2.1% (forecast 0.6%) and erased the disappointment from the weak December data. Unfortunately, weak inflation numbers took the bloom off the rose.  Feb CPI was 0.2% vs. the consensus forecast of 0.4% while the year over year number was 1.4% vs expectations for 2.0%. In reality, both data series will be forgotten next week following the release of the Canadian budget on March 22.

FX markets were on the lethargic side overnight and took a break from the relentless selling of US dollars but traders did not buy dollars with any enthusiasm either.

USDJPY made a push below 111.00 support in Asia which didn’t last.  The sudden spike from 110.80 to 111.38 reeked of BoJ minions “checking rates”.  An AUDUSD rally ran out of steam at 0.7679 in early Asia and then it drifted lower for the rest of the night.

EURUSD opened up offered in Europe and slid back below 1.1300 helped by a bit of verbal intervention by ECB’s Peter Praet who said “further rate reduction remains a possibility”. You will recall that it was Mario Draghi who said that rate cuts were finished, in his press conference.  Someone’s wires are crossed.

The Canadian dollar is ending the week (at the time of writing, anyway) as the best performing G10 currency, buoyed by firm oil prices, strong looking domestic data and general US dollar weakness v. the majors. The Loonie may have even got a small nudge from news that TransCanada Pipelines announced a US$13.00/share takeover of Houston’s Columbia Pipeline Group.  It is an all cash deal which is expected to close in H2.

USDCAD technical outlook

The USDCAD technicals are bearish while trading below 1.3020 looking to extend losses below 1.2925 down to 1.2860. A break above 1.3020 would suggest that an intraday bottom is in place and target a move to 1.3120.  For today, USDCAD support is at 1.2925, 1.2910 and 1.2860. Resistance is at 1.3020, 1.3080 and 1.3120

Today’s Range 1.2940-1.3020

Chart: USDCAD  4 hour