USDCAD Overnight Range 1.3261-1.3400
A weaker than expected Retail Sales report took the wind out of the sails of the overnight US dollar rally. Retail Sales dropped 0.1% in February vs. consensus forecast for a gain of 0.1% but adding to the dollar’s woes was the downward revision to the January data. The prospect for a hawkish sounding FOMC statement tomorrow has been dealt a blow.
In Asia, the US dollar moved higher against all the G10 currencies with the Japanese yen being the lone exception, once again. USDJPY declined following the Bank of Japan interest rate decision despite a rather gloomy assessment of the domestic economy. Rates were left unchanged as widely expected but traders were disappointed in the lack of new stimulus initiatives.
In Europe, EURUSD continued to trade sideways in a 1.1070-1.1170 band. Meanwhile, GBPUSD is suffered from another bout of Brexit Indigestion after a poll showed the “exit” side leading. GBPUSD dropped to 1.4148 from 1.4305 but has since bounced back to 1.4190.
Oil prices continued their slide as traders realize that talk is cheap. Prices rose on chatter about proposed production caps from Russia/Opec which excluded Iran. However, without actual production cuts the chatter was not doing anything to address the oversupply/low demand situation and WTI prices are well off the recent peak.
Oil price weakness and “just-in-case” buying of US dollars ahead of Wednesday’s FOMC meeting undermined commodity currencies and boosted USDCAD but the soft US data has pared back those gains.
USDCAD technical outlook
The intraday USDCAD technicals are bullish while trading above 1.3290 and supported by the break of resistance in the 1.3320 area. A break of the 1.3395-1.3405 opens the door to further gains to the 1.3440-60 area. At the same time, the downtrend that began January 21 with the break of support at 1.4400 remains intact while trading below the 1.3550 area. For today, USDCAD support is at 1.3330 and 1.3290. Resistance is at 1.3405 and 1.3450.
Chart: USDCAD 4 hour
Forecast Range for the day 1.3330-1.3405