April 18, 2019

USDCAD Open (6:00 am EDT) 1.3373-76:  Overnight Range 1.3334-1.3397

The greenback is flexing its muscles and is in demand. US retail sales rose 1.6% m/m in March and the ex-auto component rose 1.2%.  Both results were far better than expected and the US dollar added to its post European data gains.  The greenback got an added lift from another better than expected weekly jobless claims report.

Canadian retail sales were also better than expected, and no one cared.  They rose 0.8% in February, the first increase in three months, but the news didn’t benefit the domestic currency.  USDCAD climbed from 1.3375 to 1.3397 because traders determined that the US March data was more relevant then the Canadian February data.

Source:  Statistics Canada

Overnight, a round of weaker than forecast Euro-area and Eurozone Manufacturing PMI’s knocked EURUSD to the floor.  The single currency spent a sleepy Asia session in a narrow 1.1290-1.1302 range before the data. It hit 1.1245 immediately afterwards.  The reaction may be overdone as Eurozone and German Manufacturing PMI , although below the forecasts, were a tick better than the previous month’s results. It was also the first time in eight months that Eurozone PMI increased, rather than declined.

UK March Retail Sales rose 1.1%, well above the forecast for a 0.3% decline and better than February’s 0.6% rise.  The news didn’t help GBPUSD which still dropped from 1.3051 to 1.3008. 

The Japanese yen was the only G-10 major currency to gain against the US dollar since yesterday’s New York close. A minor whiff of risk aversion trading rippled through FX markets as the euphoria from yesterday’s China data faded and traders looked ahead to the Easter weekend holidays.

AUDUSD popped following a better than expected employment report.  Australia added 25,700 jobs in March which was above the forecast of 12,000.  The results were quickly forgotten in the face of broad US dollar strength.   NZDUSD tracked AUDUSD lower.

WTI oil prices consolidated yesterday’s losses in a $63.48/b-$63.86/b range despite the weekly EIA oil stocks report showing crude inventories fell by 1.396 million barrels.  Traders were more focused on booking profits ahead of the weekend.

The US market is open tomorrow but it will be lonely. Most European centers are close for Good Friday and Easter Monday.

USDCAD Technical Outlook

The intreaday USDCAD technicals are bullish inside the well-defined 1.3260-1.3460 trading range.  A break either side of that band would result in a 0.0100 point move but that is not likely to happen today.  The intraday technicals are modestly bullish while prices are above 1.3350, looking for a break of 1.3400 toi lead to a test of 1.3460.  Below 1.3350 targets 1.3300.  

Today’s Range 1.3340-1.3400

Chart: USDCAD  4 hour