Article by ForexTime
The Canadian dollar has come back sharply into focus today, as retail sales data disappointed the market. While the figure of -0.8% m/m was much worse than expected at -0.1% m/m, the Canadian dollar still managed to claw back some ground after the fall. The reason being that despite the fall today Canadian sales y/y remain high, up 6.7% for the year which indicates that the economy for the most part is doing well. This is also in line with oil prices remaining elevated as well, which in turn is helping to driving the Canadian economy quite heavily at present. The small hiccup we’ve seen with retail sales will be noted by the Bank of Canada, but for the most part I am still optimistic we will see some lifts in interest rates in the year coming, otherwise the economy may overheat.
For the USDCAD it remains elevated in the current market, and today’s negative news did dampen spirits for it climbing higher. The bullish move became unstuck though at the 200 day moving average as traders looked to exit at this point. If the USDCAD continues to rise then I would expect that the next targeted level of resistance will be at 1.2800, with the hard level being found at 1.2921. Any movements above the 1.2921 would be hard to sustain in the current market climate I feel, unless the USD really starts to come back into vogue and markets become a lot more bullish. If the CAD does become bullish again and the USDCAD becomes bearish then I would anticipate support to be found at 1.2585 and 1.2423 on the chart. However, at this present time the USDCAD is trending nicely and the trend is always your friend.
Oil has bounced back today on the back of some positive news out of the US markets, with Crude inventories showing a drawdown of -1.62M barrels (2.9M exp). This is positive as many had expected to see a rise in surplus, so traders were quick to jump on the back of oil and push it higher as a result. Gasoline and Distillate inventories were also showing signs of a drawdown with Gasoline being the only one to publish a surplus at 0.26M. While the US continues to look to produce more oil, it seems that the economy is starting to consume more, thus being positive for the upside for oil. However, it still weighs heavily on OPEC controlling production still at this stage.
On the charts oil was quite bullish today as the last two days of losses were quickly erased by the bullish movement. The 20 day moving average was also cracked as traders rushed higher on the news, however it needs to close above for me to feel confident about further bullish moves, as a close above would enable tomorrows candle to use it as dynamic support. In the event of movements higher, 63.25 is the next level of resistance, while 66.05 is the long term target for bullish oil traders in the market. If we see further falls then 61.00 is likely to act as support in this scenario, but it will be a hard level to beat at present.
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Article by ForexTime
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