USD/CAD – Canadian dollar gains ground despite decline in retail sales

USD/CAD is lower in the Wednesday session, erasing the gains seen on Tuesday. Currently, the pair is trading at 1.3307, down 0.37% on the day. In Canada, retail sales data disappointed and missed estimates. Retail sales dropped 0.9% in November, its weakest reading since April 2018. Core retail sales declined 0.6%, its sharpest drop since December 2017. There are no major U.S. events on the schedule. On Thursday, the U.S. releases unemployment claims.

There was pessimistic news on Monday from the International Monetary Fund on Monday, which revised downwards its global growth forecast. In October, the IMF projected growth of 3.7% percent, but this has been revised to 3.5 percent. IMF head Christine Lagarde said that the world’s economy continues to expand, but “it is facing significantly higher risks”. Canadian growth was also revised lower, to 1.9% down from 2.0% in October. Earlier in January, the BoC lowered its growth forecast for the economy, from 2.1% in October down to 1.7%. With the Canadian economy vulnerable to global trade tensions and lower oil prices, the Canadian dollar could hit some headwinds in early 2019.

Investors were greeted with weak data on Monday, as China released GDP numbers. The world’s second largest economy continues to expand, but GDP has been softening, pointing to an economic slowdown. China reported that GDP had slowed to 6.6% in 2018, marking its lowest level since 1990. GDP for the fourth quarter dipped to 6.4%, compared to 6.5% in the previous quarter. The soft GDP release comes on the heels of soft trade and manufacturing data.

Appetite for market risk is very low

Profit taking seen in light trading

USD/CAD Fundamentals

Wednesday (January 23)

  • 8:30 Canadian Core Retail Sales. Estimate -0.4%. Actual -0.6%
  • 8:30 Canadian Retail Sales. Estimate -0.6%. Actual -0.9%
  • 9:00 US HPI. Estimate 0.3%
  • 10:00 US Richmond Manufacturing Index. Estimate -2

Thursday (January 24)

  • 8:30 US Unemployment Claims. Estimate 212K. Actual 199K
  • 9:45 US Flash Manufacturing PMI. Estimate 53.5. Actual 54.9
  • 9:45 US Flash Services PMI. Estimate 54.0. Actual 54.2
  • 10:00 US CB Leading Index. Estimate -0.1%
  • 10:30 US Natural Gas Storage. Estimate -145B
  • 11:00 US Crude Oil Inventories. Estimate -0.2M

*All release times are EST

*Key events are in bold

USD/CAD for Wednesday, January 23, 2019

USD/CAD, January 23 at 8:45 EST

Open: 1.3356 High: 1.3359 Low: 1.3305 Close: 1.3305

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.3125 1.3200 1.3290 1.3383 1.3561 1.3552

USD/CAD has posted small losses in the Asian and European sessions, The pair has ticked higher early in North American trade

  • 1.3290 is providing weak support
  • 1.3383 is the next resistance line
  • Current range: 1.3290 to 1.3383

Further levels in both directions:

  • Below: 1.3290, 1.3200, 1.3125 and 1.3049
  • Above: 1.3383, 1.3461 and 1.3552

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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