USD/CAD Unfazed by Weak Canada Retail Sales; RSI Divergence Emerges

Talking Points:

USD/CAD Unfazed by Weak Canada Retail Sales; RSI Divergence Emerges.

AUD/USD Extends Bearish Series Following Lackluster Australia 1Q CPI.

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USD/CAD Daily

USD/CAD Daily Chart

Chart – Created Using Trading View

  • USD/CAD ramped adult to a uninformed 2017-high of 1.3626 as U.S. President Donald Trump announced skeleton to exercise a tariff on softwood lumber imports from Canada, and a broader opinion stays constructive as a span mostly preserves a bullish trend carried over from a prior year.
  • However, a near-term allege in a sell rate appears to be removing tired as a 1.3630 (38.2% retracement) jump continues to offer resistance, while a Relative Strength Index (RSI) struggles to pull into overbought territory; might see a bearish dissimilarity take figure as a oscillator fails to mangle above 70.
  • With that said, a singular greeting to a 0.6% decrease in Canada Retail Sales suggests a pivotal developments entrance out of a U.S. might have a larger impact on a sell rate, and a U.S. 1Q Gross Domestic Product (GDP) might stoke a serve decrease in USD/CAD as a world’s largest economy is projected to grow an annualized 1.0% following a 2.1% enlargement during a final three-months of 2016; signs of slower enlargement might also drag on interest-rate expectations as a Federal Reserve warns ‘participants continued to underscore a substantial doubt about a timing and inlet of intensity changes to mercantile policies as good as a distance of a effects of such changes on mercantile activity.’
  • In turn, a shutting cost subsequent 1.3560 (50% expansion) might coax a pierce behind towards a Fibonacci overlie around 1.3450 (23.6% retracement) to 1.3460 (61.8% retracement), with a subsequent downside segment of seductiveness entrance in around 1..3360 (38.2% retracement).

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AUD/USD Daily

AUD/USD Daily Chart

Chart – Created Using Trading View

  • AUD/USD extends a array of reduce highs lows from progressing this week and slips to a uninformed monthly low of 0.7461 as Australia’s 1Q Consumer Price Index (CPI) failed to meet marketplace expectations; near-term opinion stays slanted to a downside as a span searches for support, while a RSI safety a bearish arrangement carried over from February.
  • The churned collection of information is expected to keep a Reserve Bank of Australia (RBA) on a sidelines during a May 2 meeting, and a executive bank might continue to validate a wait-and-see proceed for financial process as officials advise ‘wage enlargement and broader measures of work cost pressures remained subdued;’ in turn, some-more of a same from Governor Philip Lowe and Co. might eventually moderate a seductiveness of a aussie as marketplace participants pull behind bets for a rate-hike.
  • In contrast, a Federal Open Market Committee (FOMC) might send a some-more hawkish tinge during a May 3 seductiveness rate preference as a executive bank pledges to serve normalize financial process over a entrance months, with Fed Fund Futures still highlighting a larger than 70% luck for a Jun rate-hike; however, a executive bank might refrain from releasing a some-more minute exit plan amid a uncertainty surrounding a mercantile outlook, and Chair Janet Yellen and Co. might try to buy some-more time as Fed officials disagree a ‘recent aloft readings on title acceleration had mostly reflected a proxy outcome of increases in consumer appetite prices.’
  • Nevertheless, a downside stays in concentration going into a finish of April, with a break/close subsequent 0.7450 (38.2% retracement) opening adult a subsequent segment of seductiveness around 0.7390 (38.2% retracement) to 0.7420 (61.8% retracement) followed by 0.7330 (50% retracement) to 0.7350 (38.2% expansion).

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— Written by David Song, Currency Analyst

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