The risk-on trade continues to perform well contributing to overall dollar weakness versus the majors. The British pound and the Canadian dollar were the strongest performers this morning heading into the New York trading session with Canadian retail sales on tap.
The release of stronger than expected British retail sales added momentum to the bullish move behind the pound. March retail sales rose 0.2%. February retail sales were adjusted slightly lower to -0.9% from -0.8%. Economists expected a decrease of -0.5%. The unexpected rise in retail sales numbers sent the GBP/USD soaring to a 17-month high at 1.6572. Since the pair rebounded on Monday from a low at 1.6165, the pound has gained 4 cents on the dollar. Traders should now be eyeing a target of 1.6880 followed by 1.7040. Support comes in at 1.6430.
Overall dollar weakness continues with the greenback declining versus the majors. Prior to the New York open, the EUR/USD traded at a 16-month high at 1.4648 before falling back to 1.4595. The USD/CHF is down sharply at 0.8815 from 0.8875.
This afternoon traders will be following data releases from both Canada and the US. Core Canadian retail sales m/m are due out and are expected to show a 0.5% increase after staying flat in the month of February. This morning the USD/CAD traded as low as 0.9453 and is currently trading at 0.9472. The Loonie has been a strong performer versus the dollar and Tuesday’s stronger than expected inflationary data hints at potential monetary policy tightening to control price pressures. Traders should be long on the Canadian dollar with a target at the all-time low for the USD/CAD at 0.9050.
US unemployment claims are expected as well as the Philly Fed Manufacturing Index. Strong economic data from the US should help to continue the risk-on trade and prolonged dollar weakness. EUR/USD targets may be moved up to the January 2009 high at 1.5140 with initial resistance at 1.4580. The support is also raised to last week’s high of 1.4520.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
