Can. dollar ticks higher after retail sales

Solid retail sales fails to move loonie

Canada’s retail sales rebounded in October after a disappointing release for September. Headline retail sales rose 1.6% (vs. -0.3% in September), while core retail sales climbed 1.3% (vs. 0.2% in September). The increase was led by sales in motor vehicles and parts, as well as general merchandise. This points to a well-balanced increase in consumer spending, as the recovery accelerates, despite the challenges of the Omicron variant.

Despite the strong retail sales reports, the Canadian dollar remains weak, with the symbolic 1.30 level not too far away. The currency is a key risk barometer, and has been pointing south much of the time. Risk appetite has been curbed by the explosion in the infection rate due to Omicron, with the US reporting its first fatality from the variant. According to the US Centers for Disease Control and Prevention, Omicron now accounts for 73% of all Covid cases in the country. Based on the grim situation in Europe, Omicron will almost certainly lead to a huge spike in infection rates in the US.

Domestically, the latest twist on Capitol Hill has also sapped risk appetite. President Biden has touted the Build Back Better spending bill as a key legislative aim, but the bill is being held up by a Democratic senator, Joe Manchin. Without Manchin’s support, the bill will have to go back to the drawing board as the red-faced Biden will be unable to pass the package before Christmas. Biden and the Democrats desperately need a major legislative victory, as irate consumers, hammered by high gasoline and food prices could send the Democrats to defeat in next year’s mid-term elections.

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USD/CAD Technical

    • USD/CAD has support at 1.2756. Below, there is support at 1.2615
    • There is resistance at 1.2987. Above, there is resistance at 1.3077

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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