The Canadian dollar traded quietly overnight but made things interesting in early New York trading.USDCAD dropped from 1.2674 to 1.2627 ahead of this morning’s domestic inflation and retail sales reports.  March CPI was 0.3%, a tick below the 0.4% forecast and well below February’s 0.6% gain.  Economists and the Bank of Canada expected some payback.  However, intradayUSDCAD traders were caught short.  Retail sales data was soft due to the decline in Retail Sales ex-autos.

The US dollar is finishing the week with gains across the board led by a 1.8% fall in NZDUSD.  The British pound and Swiss franc are close behind with losses of 1.24% since last Friday’s New York close.

A series of weak UK data reports put downward pressure on GBPUSD in the latter part of this week.  Bank of England Governor Mark Carney greased the skids yesterday afternoon.  He seemingly downplayed the odds for a UK rate hike in May, stating that there are other meetings.  FX traders were primed for higher rates and long GBPUSD which exacerbated the selling from 1.4197 yesterday afternoon to 1.4065 when New York opened this morning.

USDJPY finally snapped the 107.00-50 range and traded at 107.73 in Asia fueled by a rally in US Treasury yields.  Japan Core CPI dipped to 0.9%, y/y in March, down from 1.0% previously which contributed to the USDJPY gains.

EURUSD is trading with a negative bias due to a mix of fundamentals and technicals.  US Treasury yields have risen substantially this week indicating the prospect of higher US inflation driving rates higher, supported by mostly positive US economic data.  The failure to extend gains above 1.2400 and the break of minor support in the 1.2340-60 area have shifted the focus to 1.2240-50 support.

AUDUSD and NZDUSD have been clocked by the gains in US Treasury yields, some commodity price weakness and broad US dollar strength. NZDUSD losses.

Asia Stock markets closed with losses, European markets are higher, and New York equity indices futures are in negative territory.  Oil prices have hung on to this week’s gains.  WTI is below yesterday’s $69.50/b peak and is sitting at $68.56.

USDCAD Technical Outlook

USDCAD is in a downtrend from March 19  while prices are below the 1.2705-20 area.  As long as prices are below this level, today’s rally is a correction.  A break of 1.2720 would extend gains to 1.2790-1.2805.  For today, USDCAD support is at 1.2665 and 1.2620.  Resistance is at 1.2720 and 1.2760.

Today’s Range 1.2660-1.2750