Much volatility is seen in Canadian dollar in early US session after mixed economic data. Headline CPI dropped more than expected by -0.2% mom in July while the yoy rate slowed to 2.1%, below expectation of 2.3% yoy. Core CPI unexpectedly dropped -0.1% mom and and slowed to 1.7% yoy, versus expectation of rise to 1.9% yoy. However, the negative impact was somewhat offset by strong retail sales data. Headline sales rose 1.1% in June versus expectation of 0.6%. Ex-auto sales rose 1.5% versus expectation of 0.6%. Overall, USD/CAD is limited below yesterday’s high of 1.0986 and some more consolidations could be seen.
Investors are awaiting Fed chairman Yellen’s speech in the annual Jackson Hole symposium. A key focus on Yellen’s speech will be on her assessment on the health of the labor market as the topic of this year’s symposium is “Re-Evaluating Labor Market Dynamics”. The more hawkish than expected FOMC minutes released earlier this week boosted the greenback higher. They unveiled that policymakers had detailed discussion of the exit strategy and would probably release the detail sin September. The FOMC members acknowledged the improvement in the job market. And staff lowered the unemployment rate forecast in response to the faster decline in the unemployment rate. Eyes will be on whether Yellen’s comments today would reinforce the current dollar sentiments, or rather, cool it down.
Due to strong rally in risk markets, AUD/JPY is one of the strongest pair this week. Indeed, the break of 96.51 resistance suggests that the cross has finally broken out from medium term range. And, the long term rebound from 86.40 is resuming. Near term outlook is now bullish for 61.8% retracement of 105.42 to 86.40 at 98.15. However, as the structure of the rise from 96.40 looks corrective, we’d expect strong resistance above 98.15 to limit upside and bring reversal.
Daily Pivots: (S1) 1.6561; (P) 1.6581; (R1) 1.6598; More…
Intraday bias in GBP/USD as the decline from 1.7190 continues. The current development confirms medium medium term reversal and deeper fall should be seen to 1.6251 cluster support (38.2% retracement of 1.4813 to 1.7190 at 1.6282). Meanwhile, break of 1.6737 resistance is needed to be the first indication of short term bottoming. Otherwise, outlook will stay bearish in case of recovery.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. The current development, with medium term top formed at 1.7190, argues that such consolidation is possibly completed, just below 50% retracement from 2.1161 to 1.3503 at 1.7332. Focus now turns to 55 weeks EMA (now at 1.6506). Sustained trading there will pave the way for 1.4813 key support and below.
CPI M/M Jul
CPI Y/Y Jul
BoC CPI Core M/M Jul
BoC CPI Core Y/Y Jul
Retail Sales M/M Jun
Retail Sales Less Autos M/M Jun