There is nothing like a dose of decent economic data to combat rumour-mongering in financial markets. Eurozone data was the Xanax for EURUSD.The single-currency traded sideways in Asia, after probing support in the 1.1520 area. A dose of better-than-expected German and Eurozone data sent EURUSD skyward, rising from 1.1520 to 1.1617 when New York opened. German Retail Sales rose 2.3% (forecast 0.7%), and the unemployment rate dropped to 5.2% from 5.3%.Eurozone Economic Sentiment Index (ESI) was 112.5 (forecast 112.1)
Nothing has been resolved on the Italian political front.The major parties are still trying to form a government.
The rally in EURUSD dragged the rest of the G10 major currencies along for the ride. GBPUSD climbed from 1.3243 to 1.3292 and then retreated to 1.3265 in early New York trading.
USDJPY opened in New York at 108.79, near the overnight session peak of 108.88, supported by the easing of risk aversion fears and a big bounce in US Treasury yields. The 10-year Treasury yield was a 2.777% near the end of the day and is currently sitting at 2.877%.
NZDUSD rallied from 0.6879 to 0.6947, as this is being written, supported by a modestly upbeat RBNZ Financial Stability Report and broad US dollar weakness. AUDUSD went along for the ride.
USDCAD tracked broad US dollar moves. It drifted off of its 1.3038 peak and is at 1.2985. A rebound in WTI oil prices, from $66.38/barrel to $67.13, helped. The Bank of Canada Monetary Policy statement is due this morning. The BoC is expected to leave rates unchanged and issue a cautious-sounding statement. Prior to the announcement, Canada Industrial Production and Raw Materials Price Index reports will be released.
US data includes Q1 GDP (expected 2.3%), Wholesale Inventories, PCE, ADP Employment (forecast 190,000)
USDCAD Technical Outlook
The USDCAD technicals are bullish while prices are above the 1.2960-70 support area.If prices move below 1.2960 it would extend losses to 1.2920 and then 1.2860. A break above 1.3040 would lead to 1.3080 and 1.3125. For today, USDCAD support is at 1.2960 and 1.2920. Resistance is at 1.3010, 1.3040 and 1.3080
Today’s Range 1.2960-1.3250