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USDCAD continues to slide following weak CPI and retail sales

Posted on: July 14, 2017

After taking a breather yesterday, the USDCAD capitulation is back on this morning thanks to some poor US data. CPI and Retail Sales both missed expectations, with CPI posting a flat 0% compared to forecast of 0.1% and Retail Sales declining 0.2%, compared to estimates of +0.2%. Negative data could weigh on GDP tracking. Moreover, if weakness continues to broaden we could see a change of course for the Feds rate hike plan. Gold is currently bidding higher on top of the weak data. Later today, the US will release UoM Consumer Sentiment, which is expected to gain 95 points.

With oil giving back its gains from this morning from high fuel inventories, we may need to wait for next week for a new catalyst to spark CAD short covering.

On the downside, support comes in around 1.2650/60 and again around 1.2600 while 1.2770/80 provide initial resistance.

Next week will be a big decision for the ECB as it eases into preparation phase for tapering. Participants believe that Draghi will initiate the next step on the July 20 meeting; however, given recent sensitive market reaction to Draghi’s comments, communication from the ECB is expected to be cool, calm and collected. We can expect that policy officials will note and bake in the strengthening economic data to justify the policy shift.

  • Yesterdays NA 1.2721 - 1.2771
  • Asia 1.2721 - 1.2736
  • London 1.2693 - 1.2747


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