USDCAD dips to 1.2422 before climbing to 1.2565 on weak Canadian retail sales

VBCE Daily Foreign Exchange Update for Friday, Feb. 20th, 2015

USDCAD spot rate: 1.2510 - 1.2515 (AS AT 8:07AM PST)

RANGES:	Asia:	1.2480	to	1.2498
	Europe:	1.2422	to	1.2487
	North America:	1.2443	to	1.2565

Technical Support / Resistance:

S2	S1	R1	R2
1.2363	1.2420	1.2560	1.2713

Key Economic Data Releases:

-Canada retail sales: -2.0% (exp. -0.4%) ex autos: -2.3% (exp. -0.8%)

-U.S. Markit manufacturing PMI: 54.3 (exp. 53.6)

Key Event Calendar:

DATE	CANADA	U.S.A.
Feb. 23		Existing homes sales
Feb. 24	Bank of Canada speech	Markit services PMI, consumer confidence
Feb. 25		New home sales
Feb. 26	Consumer price index	CPI, durable goods, jobless claims
Feb. 27		GDP, Chicago PMI, consumer sentiment

Yesterday, USDCAD traded from 1.2438 up to 1.2555 as oil prices were initially down 5% because of an early report by API crude oil inventory data that showed a buildup of 14 million barrels. EIA reported a much smaller inventory buildup at 8:00am sending oil prices back up and causing USDCAD to fall to 1.2475/80. The pairing remained in a 1.2480 – 1.2510 range for the balance of the session. Overnight, the commodity bloc (AUD, NZD, and CAD) were the best performing currencies and USDCAD dipped to 1.2422. The pairing bounced to 1.2465 ahead of the 5:30am Canadian retail sales data release. USDCAD quickly climbed to 1.2540 as retail sales missed estimates, followed by a pull-back to 1.2510. Another move higher stalled just above yesterday’s high (1.2555) at 1.2565 followed by another pull-back to 1.2510. There is speculation that the poor retail sales data could lead to another Bank of Canada interest rate cut on March 4TH. The EURO initially dipped 1.5 cents vs. the CAD only to gain nearly 2 cents because of an “administrative error” by Greece. Greece will in fact accept the bailout conditions agreed to by the previous government – a statement that had been omitted in an official document yesterday in ongoing negotiations between Greece and the European Union. Currently, the TSX is down 0.20% while the DJIA is unchanged. EURCAD is unchanged trading between 1.4058 and 1.4237. GBPCAD is unchanged trading between 1.9111 and 1.9293. JPYCAD is up 0.25% trading between 0.01048 and 0.01061. Gold is unchanged trading between $1,202 and $1,215USD/oz, silver is down 0.25% trading between $16.32 and $16.58USD/oz, while oil is unchanged, trading between $51.06.15 and $52.45.

Sources: Reuters, Bloomberg, FXStreet, RBC Capital Markets, Bank of Canada, U.S. Federal Reserve, CNBC, Forexlive