July 16, 2019

USDCAD open (6:00 am EDT) 1.3053-56             Overnight Range: 1.3042-1.3062

US June Retail Sales rose 0.4% m/m, well above the 0.1% forecast and the US dollar caught a bit of a bid.  The report ticks another box in Fed Chair Powell’s list of reasons for not aggressively cutting US interest rates.

The news further undercut EURUSD which was already under downward pressure from weaker than expected Eurozone and German data. EURUSD’s failure to decisively take out resistance in the 1.1270 area, combined with weaker than expected German ZEW data drove the single currency from 1.1262 to 1.1229 in early New York trading.  Concerns around Iran tensions and the US/China trade war drove Economic Sentiment to -24.5 from -22.1 while the Current Situation dropped to -1.1 from 7.8

GBPUSD plunged from 1.2519 to 1.2450 as fresh “no-deal” Brexit fears took a bite out of the pound. Tory leadership hopefuls, Johnson and Hunt, said they would scrap the Irish backstop plan.  The EU would not be happy and may just wave goodbye to the UK on October 31.  Better than expected UK employment data was ignored. UK employment data showed employment at a record high and wage increases outpacing inflation

In Asia, AUDUSD gains in early trading were erased following the release of the RBA minutes which suggested further rate cuts were likely. NZDUSD out-performed its Antipodean counterpart supported by inflation data.  Q2 CPI y/y rose 1.7% compared to 1.5% previously, which reduced the urgency for another rate cut.

USDJPY rallied in Asia but reversed the move in Europe, falling from 108.09 to 107.83. The move coincided with a small-drop in US Treasury yields.

WTI oil prices consolidated yesterday’s losses and have returned to flirting with $60.00/b in early New York trading.

USDCAD is underpinned by broad US dollar strength with the softer oil price profile giving the currency pair an added boost.

Other US data today includes: Industrial Production, Capacity Utilization, Business Inventories and NAHB Housing Market Index are

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while prices are below 1.3060, looking for a break of support at 1.2990 to extend losses to 1.2750.  A break above 1.3060 would target 1.3090 and then 1.3120. For today, USDCAD support is at 1.3020 and 1.2990.  Resistance is at 1.3060 and 1.3090.  Today’s Range 1.3010-1.3060

Chart: USDCAD 30 minute

Source: Saxo Bank