Summary: Canadians went on a shopping spree in March and USDCAD dipped on the news before retracing its steps as traders dug into the data.
Nevertheless, the retail sales report was robust and supported the Bank of Canada view that earlier economic weakness was merely a “soft patch,” in part due to weak oil prices. They expect economic growth to pick up in Q2. Today’s data combined with the steady inflation and robust unemployment reports suggest next weeks Bank of Canada monetary policy statement could be a tad hawkish.
The intraday USDCAD technicals are bearish below 1.3410, with the break of support at 1.3370 targeting further losses to 1.3320. However, US/China, US/Iran tensions, Brexit, and EU elections limit USDCAD downside as a stampede into safe-haven trades is only a headline away.
Wall Street gave back a small part of yesterday’s gains in early trading, but the price action is just noise ahead of the release of the May 1, Federal Open Market Committee minutes in a few hours.
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