It's been a mixed day today for the UK economy as core retail sales received a solid boost to come in at 4.1% y/y (3.5% exp), this was a good result, but at the same time normal retail sales y/y came in lower than expected at 3.8% y/y (3.9% exp). Overall it was relatively positive news for the UK economy, but the cloud of the Brexit still hangs strongly over the UK economy and especially the pound in particular. The GBPUSD was upbeat however even at the possibility over the Brexit and the fact that no one at present can measure the economic impact, which in turn means that markets are incredibly fearful over the possibility of this becoming a reality.
The GBPUSD was positive and the market will be viewing this was caution. The market opened the day breaking through support at 1.4082 before failing to gain any ground and then lifting on the charts higher. I am myself cautious of this recent move on the charts as in the long run it does not make sense given the recent bearish movements we have seen when it comes to the GPBUSD. What could be interesting here is the fact that if we see a push higher and a rejection around 1.4395 then we could have a head and shoulders pattern forming which would carry a lot of momentum of the daily chart.
The Canadian dollar has started to look a little weaker on the charts after the recent push higher, and this can be attributed to the fact that oil has so far looked to stop gaining on the charts. For the economic data side of things there is not too much going on, but the technical aspect is where things are certainly starting to get interesting.
The recent push higher managed to break through the bearish trend line in play, and this was a bullish signal. However, the most recent daily candle has failed to break through the key resistance level at 1.3291 and we have seen a slight rejection here and pullback on down the chart. The candle has still so far remained above the bearish trend line and to me this signals that we may see some fairly positive movements higher in the short term for the USDCAD.
Lastly, the USDJPY will be interesting tonight as the Japanese CPI data comes out. Obviously with Abenomics this has continued to be a major focus for Japan, which has struggled to find any CPI as of late. Normally the CPI y/y calculation is fairly accurate, but if we do see a drop in the CPI reading compared to expectations I would expect the USDJPY to rally strongly to resistance at 114.030. While if we saw the opposite I would expect the USDJPY to test support at 111.051. Either way tonight's CPI reading will have big implications I would anticipate this will be the last thing on markets minds before they close out for Easter.
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