This is shaping up as a very bad week for the Canadian dollar. The loonie was first hit by the Bank of Canada. Governor Stephen Poloz opened the door to more stimulus, expressing worries that are greater than those reflected in the Bank’s forecast.
The loonie was already unable to rise on good news from Canada (such as the jobs report) and when weak data strikes, the C$ is tumbling down.
Inflation numbers came out, and they were mediocre: 0.1% m/m, weaker than 0.2% expected. Year over year, CPI is up only 1.3% against 1.5% predicted. Core inflation is OK: 0.2% m/m and 1.8% y/y as expected.
Yet at the same time, retail sales came out with bigger misses: headline sales dropped 0.1% against a rise of 0.3% expected and alongside a downwards revision for the previous month worth 0.1%. Core sales followed the same path by remaining flat against +0.3% expected, and the same negative revision applies also here.
USD/CAD currently trades at 1.3326, after reaching a (temporary?) high of 1.3350, the highest since mid-March. Resistance awaits at 1.3380, followed by 1.3460.
More: CAD: Here Is Why To Stay Short The Loonie Even As Oil Creeps Higher CIBC