The Canadian dollar is considerably lower in the Thursday session. Currently, USD/CAD is trading at 1.2474, up 0.56% on the day.
Will retail sales extend the Canadian dollar’s slide?
Canada releases Retail Sales for January on Friday (12:30 GMT), with the street consensus pointing to declines. Headline retail sales is expected at -3.0%, while Core Retail Sales is projected at -2.8%. Both indicators registered declines in December, so a repeat would indicate a slump in consumer spending. That could sour investors on the Canadian dollar, which has sparkled in March, with gains of 2.1 per cent. The US dollar has made gains on Thursday, courtesy of a rise in US 10-year Treasury bonds.
Fed sends the market a dovish message
The Federal Reserve meeting on Wednesday did not contain any surprises, as policymakers left monetary policy unchanged and reaffirmed its accommodative monetary policy. The Fed’s dot plot was more dovish than expected, with most FOMC members not anticipating a rate hike prior to 2024. At the same time, the Fed’s economic outlooks were upbeat, with the growth forecast upwardly revised to 6.5% this year, compared to 4.3% beforehand. Inflation is expected to rise to 2.4% in 2021, but Fed Chair Powell noted that he expected this rise to be a temporary spike that would not affect the Fed’s commitment to maintain interest rates at ultra-low levels. The US dollar has not had much trouble weathering the FOMC meeting, despite Powell’s pledge to stick with a very dovish monetary policy. On Thursday, the greenback is in positive territory against its major rivals, with higher 10-year Treasury yields providing a boost to the currency.
- USD/CAD is facing resistance at 1.2631, followed by resistance at 1.2784
- On the downside, there is support at 1.2393. The next support level is at 1.2308
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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