Canadian Dollar Update, February 18, 2022 – Canadian Dollar Awaiting Retail Sales
USD/CAD Open: 1.2699-03, Overnight Range: 1.2676-1.2716, Previous Close: 1.2709
WTI Oil is at $91.87 and gold is at $1,896.90. US markets are lower today.
For today, USD resistance is at 1.2796. Support is at 1.2666.
- Risk sentiment improves moderately
- Canada December Retail Sales expected to fall 2.1% m/m
- US dollar opens close to unchanged but down for the week
The Canadian dollar traded uneventfully overnight. It wasn’t alone. The major FX currency pairs traded quietly inside well-established bands with traders unwilling to get involved ahead of the weekend and the US Presidents Day holiday Monday.
Canada Retail Sales are expected to have dropped 2.1% m/m decline in December and Retail Sales, ex-autos are expected to be down 2.0% m/m. The poor results are due to the harsh Omicron lockdown measures suggesting the data is best ignored.
Canada is also closed Monday. February 21 is Family Day in Ontario, British Columbia, Alberta, Saskatchewan, and New Brunswick. It is Islander Day in Prince Edward Island, Heritage Day in Nova Scotia, and Louis Riel Day in Manitoba.
The Canadian dollar continues to be underpinned by oil prices despite West Texas Intermediate (WTI) losing nearly 7.0% this week. The drop is merely profit-taking after reports fears that Russia would invade Ukraine diminished, somewhat.
One moment, Russian troops are returning to base, the next, more troops have arrived then departed. Biden talks like he is reading Putin’s invasion playbook, issuing dire warnings, and sounding ominous. The hype is not quite the hysteria of the 1990 US-led invasion of Iraq, but it is getting there. When you start reading about Spetsnaz troops being described like the “elite Republican Guard,” you will know this invasion has “jumped the shark.” That’s when market focus will return to data and interest rates.
US Secretary of State Antony Blinken and Russian Foreign Minister Sergey Lavrov have scheduled talks next week, which suggests an invasion won’t be on the weekend.
EURUSD bounced in a 1.1348-1.1376 range and got a bit of support from slightly more positive Russia/Ukraine headlines. Prices were underpinned by recent comments from ECB policymakers suggesting that policy may need to be adjusted faster than previously thought and that inflation may not reach the target for at least two years.
GBPUSD rallied from 1.3602 to 1.3641 with the peak occurring following better than expected UK Retail Sales data.
USDJPY traded in a 114.80-115.29 band with prices weighed down by the dip in Treasury yields and a modest easing in risk aversion.
AUDUSD is in the middle of its 0.7178-0.7226 range. RBA board member Ian Harper said financial markets are misguided in thinking the RBA will follow the Fed rate hike path. NZDUSD traded in a 0.6689-0.6728 band supported by expectations for a hawkish result at next Wednesday’s RBNZ meeting.
Today’s Suggested Range USD/CAD: 1.2700 – 1.2800