USD/CAD yawns after soft consumer data

USD/CAD has recorded small losses on Wednesday. In the North American session, the pair is trading at 1.3190, down 0.15% on the day.

Canadian inflation and retail sales signal weak recovery

Consumer inflation rose for the first time in three months, but the small gain of 0.1% in September was not enough to shake up the sleepy Canadian dollar. The core reading also climbed by 0.1%. On the consumer spending front, retail sales in August were softer than expected. The headline reading slowed to 0.4%, down from 0.6% a month earlier. The forecast stood at 1.0%. Core retail sales, which exclude volatile items such as automobiles, rebounded to 0.5%, up from -0.4%. Still, this was well short of the estimate of 0.9%.

The soft consumer numbers are another indication that Canada’s economic recovery is tenuous, which could weigh on the Canadian dollar. The currency is up 1.5% in the month of October and on Wednesday it broke below the 1.31 level for the first time since September 8th. Given that the Canadian economy is heavily dependent on its southern neighbor, key events in the US can quickly trigger volatility in the movement of USD/CAD. The two items that traders should keep a close eye on are the ongoing discussions over a massive fiscal stimulus bill, and of course the upcoming US presidential election. Treasury Secretary Steven Mnuchin and Democrat Nancy Pelosi continue to try and reach an agreement, and the markets continue to hang on every report about the talks. If a deal is reached, risk appetite would likely jump, which could translate into gains for the Canadian dollar at the expense of the greenback.

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USD/CAD Technical

  • We find support at 1.3089. This is followed by support at 1.3047
  • 1.3188 is the next resistance line. Above, there is resistance at 1.3245
  • USD/CAD broke below the 10-day MA on Tuesday, which is a sign of a downward trend

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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