US Retail Sales beat estimates and rose 0.5%, m/m in July.  Retail Sales, ex-autos also beat forecasts, rising 0.6% in the same period (forecast 0.2%, m/m)  The New York Empire Manufacturing Index (August) climbed to 25.0 from 22.6.  The strong data was expected and the US dollar reaction was mixed.

The US dollar drifted higher overnight.  FX trading volumes were low due to summer vacations and holiday’s in large parts of Europe.  Asia equity indices were deep in the red while Eurozone bourses were flat.  US equity futures point to a soft opening on Wall Street.

The Turkish Lira rallied after central bank officials reduced the amount of currency swap transactions that banks could participate in.  USDTRY dropped from 6.5800 to 5.9251 on the news but has since bounced to 6.1610.  President Erdogan slapped tariffs on a range of US goods including on cars which more than tripled to 120% (from 35%).  President Trump is certain to respond.

Elsewhere, UK inflation rose 2.5% y/y, and DCLG House Price Index climbed to 3.0%  y/y, (forecast 2.7%), but a drop in the July Retail Price Index (Actual 3.2% vs forecast 3.4%) negated initial GBPUSD gains.  GBPUSD traded in a 1.2693-1.2734 range with a negative bias.

EURUSD opened in New York at the bottom of its 1.1317-1.1349 overnight range.  Prices continue to be undermined by differing ECB/Fed monetary policy, and contagion fears from the Turkey crisis.  The intraday and short-term technicals are bearish below 1.1350.  A break above that level targets 1.1390. Support is in the 1.1280-1.1305 area.

USDJPY traders are seeing demand from broad US demand and the outlook for higher rates being offset by safe-haven demand for yen.  USDJPY is in an uptrend above 110.70, which is guarded by support at 110.90.but rallies have been capped at 111.70.

The antipodean currencies are weighed down by dovish central bank policies and weak commodity prices. Weaker than expected Westpac Consumer Confidence data led to short =-lived AUDUSD but the currency pair remained in a 0.7204-0.7240 range.

Oil prices dropped again, falling from $67.20 just before yesterday’s API weekly crude stocks change report to $66.05/b this morning and they are currently trqading at $66.36.  API reported US crude inventories rose 366 million barrels.  The inventory rise combined with fears that a global economic slowdown will reduce oil demand drove prices lower.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish above 1.3060 looking for a break above 1.3110 to lead to a retest of the 1.3160-70 area.  A break to the top would target 1.3290.  A move below 1.3060 would lead down to 1.3000.

Today’s Range 1.3060-1.3160