Following an upwardly revised 2.2 percent increase in May, Canadian retail sales edged down a less than expected 0.2 percent in June. Sales were down in 6 of 11 subsectors, representing 52 percent of total retail trade. On the year, sales were up 3.8 percent. In volume terms, real sales were down 0.3 percent and were up 0.7 percent on the year.
The USDCAD is still in a range and will likely stay around these levels as the U.S. and Mexico finalize their side of the NAFTA agreement, meanwhile the Canadian government is on the sidelines waiting to see what happens.
90 day simple moving average 1.3020
USDCAD 1.3000, 1.2993,1.2975 1.3030, 1.3036, 1.3048
USD-CAD posted a two-week low of 1.3013 yesterday amid general U.S. Dollar weakness. The pair has since traded moderately firmer, with the U.S. currency steadying and on news that the Canadian government denied a Politico report that there had been a “handshake” agreement with the U.S. on NAFTA. The breach of recent daily lows at 1.3050-52 mark a bearish development for the pairing. There still remains a built-in discount to the Canadian Dollar, relating to the NAFTA renegotiation, so USD-CAD will remain directionally sensitive to developments on this front. For now, directional bias looks to remain to the downside. The August-7 low at 1.2962 provides a downside waypoint. Resistance is at 1.3050-55.
EUR-USD met good demand at 1.1550-55 after dipping during the early part of the London AM session, and the pair has subsequently vaulted to an intraday high of 1.1594 before steadying. Yesterday’s two-week high at 1.1601 has been left unchallenged thus far. The gains have mostly reflected broader Euro strength, with the common currency posting gains versus most other currencies, most notably Sterling and the Australian Dollar, which respective advances of 0.3% and 0.5%. There doesn’t appear to have been any data or news or other catalysing development behind the move, though there is conjecture in markets suggesting that legally and politically problematic convictions of Paul Manafort, the former Trump campaign chairman, and Michael Cohen, Trump’s former personal lawyer, has tipped the EUR-USD balance a little in turns of reserve and currency overlay managers likely reaction. This is despite the U.S. constitution not allowing for criminal indictment of a sitting president (according to Justice Department interpretations cited by the Washington Post), while the Republicans, who control the House and Senate, are likely to be loathe to push for impeachment while Trump’s base remains strong. EUR-USD has resistance at 1.1612-14 and support at 1.1522-24.