The Canadian dollar has recorded slight gains on Wednesday, recovering the losses seen on Tuesday. Currently, the pair is trading at 1.3050, down 0.42% on the day.
Canada consumer inflation rises
There was positive news on the inflation front, as October inflation in Canada rose to 0.4%, after two consecutive declines of -0.1%. This marked the first gain by CPI in four months and also beat the estimate of 0.2%. Trimmed CPI, an indicator which the Bank of Canada likes to use to measure core inflation, showed a second straight gain of 1.8%. Inflation is a key measure of economic activity, and the October numbers are a positive sign with regard to growth in Q4.
Retail sales next
South of the border, US retail sales were soft on Monday, dragging financial markets lower. The headline figure slowed to 0.3%, down from 1.9%, while core retail sales fell from 1.5% to 0.2%. Both releases missed their forecasts. Canada releases retail sales for September on Friday, and the markets are projecting a downward trend compared to August. The forecast stands at 0.2% for the headline release and 0.0% for Core Retail Sales. The releases could affect the movement of USD/CAD. The Covid-19 pandemic has caused tremendous economic damage to Canada and the US, and there are serious concerns that a resurgence of Covid in both countries could have a severe impact on the normally robust Christmas shopping season. With millions out of work and the economy in a fragile state, consumers will be careful about making extravagant purchases. Covid has forced many businesses to remain shut and many people are avoiding leaving their homes, which has also hurt consumer spending.
- There is support at 1.2985. Below, there is support at the 1.2835
- There is resistance at 1.3123, followed by resistance at 1.3229
- USD/CAD continues to test the 10-day MA line
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