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USD/CAD – Canadian dollar slips to 1.33 as CPI, retail sales disappoint

The Canadian dollar started the Friday session with gains, but has retracted in the North American session, after soft Canadian data. Currently, USD/CAD is trading at 1.3325, up 0.06% on the day. On the release front, Canadian CPI posted a weak gain of 0.1%, missing the estimate of 0.4%. Core retail sales came in at -0.1%, short of the forecast of 0.5%. Retail sales were dismal, with a sharp decline of 1.2%. This was well short of the estimate of 0.0%. There are no major events in the U.S.

The Canadian dollar is struggling, and June is likely to be the currency’s worst month since February. USD/CAD has gained 2.5% this month, as fears of a global trade war have soured investor appetite for minor currencies like the Canadian dollar. Canada is particularly vulnerable to protectionist moves by the United States, as some 80% of Canadian exports go to the U.S. A tight trading relationship between Canada and the U.S, anchored by the NAFTA agreement, hasn’t prevented President Trump from imposing tariffs on Canadian steel and aluminum. With the NAFTA talks showing little sign of progress, Trump has threatened to impose tariffs of 25 percent on Canadian-built vehicles. Such a move would be disastrous for the Canadian automotive sector, which is worth some C$80 billion to the economy every year. The Trudeau government has promised to help sectors hit with US tariffs, but bailing out the auto industry would cost billions. Canada may have to provide the U.S with more concessions in the NAFTA negotiations, in order to stave off tariffs against Canadian vehicles, which could have a disastrous effect on economic growth.

Central bankers converged in Sintra, Portugal this week, and the trade war between the U.S and its trading partners was high on the agenda. The United States and the EU have slapped tariffs on each other, and President Trump shook up global equity markets when he threatened to impose a 10 percent tariff on some $200 billion worth of Chinese goods. The heads of the central banks from the U.S and the European Union were united in the gloomy view of the trade conflict, with Federal Reserve Chair Jerome Powell saying that the changes in trade policy could force the Fed to “question its outlook”. ECB President Mario Draghi said that the trade spat could have negative consequences on monetary policy. If these protectionist measures force central banks to alter their monetary policy, this could have a significant impact on the currency markets.

  All eyes on OPEC [1]

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USD/CAD Fundamentals

Friday (June 22)

*All release times are DST

*Key events are in bold

 

USD/CAD for Friday, June 22, 2018

USD/CAD, June 22 at 7:40 DST

Open: 1.3317 High: 1.3323 Low: 1.3262 Close: 1.3276

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2970 1.3067 1.3160 1.3292 1.3436 1.3530

USD/CAD has posted small gains in the Asian and European sessions

Further levels in both directions:

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Kenny Fisher

Kenny Fisher [6]

Currency Analyst at Market Pulse [7]
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.