Canadian Dollar gets battered by Greenback after US Retail Sales miss on Thursday

• Canadian Dollar gains against everything except the US Dollar.
• Canadian Manufacturing Sales barely register on the radar.
• Friday’s US UoM Consumer Sentiment in the barrel.

The Canadian Dollar (CAD) is broadly higher on Friday, landing in the green against the majority of its major currency peers but still shedding over half of a percent against the US Dollar (USD) bottom-to-top. Markets piled back into the Greenback bid after US Retail Sales missed the mark on Thursday, and the US Producer Price Index (PPI) stubbornly refused to give up ground.

Canada brought an update to January’s MoM Manufacturing Sales that barely registered in markets as investors focused squarely on US data and its impact on Federal Reserve (Fed) rate cut bets. On Thursday, following the US data dump, rate futures repriced slightly lower odds of a June rate trim from the Fed. 

Daily digest market movers: US data kicks rate cut bets further back, US Dollar bids higher

• US Retail Sales in February missed expectations, rebounding to 0.6% MoM versus the forecast of 0.8%. However, this is still recovered from the previous -1.1% decline (revised lower from -0.8%).
• February’s US PPI showed producer-level inflation remains on the warm side, with YoY PPI holding steady at 2.0% instead of easing to 1.9% as markets expected.
• MoM US PPI eased to 0.3% from the previous 0.5% but failed to meet the market’s expected 0.2%.
• US Initial Jobless Claims also came in healthier than expected, with 209K new jobless benefits seekers for the week ended March 8 versus the forecast 218K. The previous week’s benefit seekers was also revised to 210K from 217K. 
• The four-week average for Initial Jobless claims has dipped to 208K as the US labor market remains too tight to allow the Fed to cut rates as quickly and easily as markets were hoping for.
• Canadian Manufacturing Sales rebounded to 0.2% in January, missing the forecast 0.4% but still recovering from the previous month’s -1.1% decline (revised down from -0.7%).

Technical analysis: Canadian Dollar broadly higher, but Greenback takes top spot on Thursday

The Canadian Dollar (CAD) is in the green against nearly all of its major currency peers, climbing a fifth of a percent against the Euro (EUR) and the Australian Dollar (AUD). The CAD is holding close to flat against the Japanese Yen (JPY) as the two battle for second place on Thursday, with the US Dollar the clear winner on the currency board. The Canadian Dollar is currently down around a third of a percent against the USD.

The USD/CAD rallied back over the 1.3500 handle as markets dog-piled back into the US Dollar, driving the pair into a fresh high for the week above 1.3530 and sending bids into battle with the 200-hour Simple Moving Average (SMA) near 1.3508. 1.3460 is the new intraday support level for sellers to beat, while a strong continuation into the top side will see a heavy supply zone near the 1.3600 handle.

Despite near-term gains, USD/CAD continues to wrestle with the 200-day SMA at 1.3480, cycling both sides of the major moving average for six straight trading days. The pair has consolidated around the 200-day SMA since rising into the 1.3500 neighborhood in January after a recovery from late December’s swing low below 1.3200.

USD/CAD hourly chart

USD/CAD daily chart