The Canadian dollar has posted slight gains on Friday. Currently, USD/CAD is trading at 1.2646, down 0.24% on the day.
Canadian dollar closes in on 1.26 line
The Canadian dollar has been creeping higher since mid-week. Earlier in the day, USD/CAD dropped to a low of 1.2609, its lowest level in four weeks. The US dollar eased overnight, and the dollar index has dropped on Friday 0.38%, to 90.24. There is support at 90.00, and a daily close below this level would signal a downtrend for the US currency.
Investors brace for soft retail sales
Canada releases retail sales reports for December later in the day (13:30 GMT). The release follows US retail sales earlier this week, but the numbers are expected to be much worse. US retail sales sizzled in January, with a gain of 5.3%, good enough for a seven-month high. The street consensus call for declines of -2.5% for headline retail sales and -2.4% for core retail sales, respectively. This would point to a sharp contraction in consumer spending, and if the forecasts prove accurate, we can expect the Canadian dollar to fall in the North American session.
Investors shrug as Canada ADP nonfarm payrolls sinks
Canada’s ADP nonfarm payrolls report has managed just one gain over the past five months, pointing to weakness in the labor market. After a small decline in December of -28.8 thousand, January was a disaster, with the economy shedding some 231.2 thousand jobs. The ADP report comes after the official Stats Canada release two weeks ago (Employment Change), which came in at -212.8 thousand, its worst reading since April 2020, when the economy was largely shut down due to Covid-19. Still, investors did not pay all that much attention to the ADP report, and the Canadian dollar registered small gains on Thursday.
- There is resistance at 1.2764. Above, we find resistance at 1.2834
- USD/CAD is testing support at 1.2642, followed by support at 1.2590
- The 50-day moving average is at 1.2742
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/