The double-feature release of Canadian retail sales and inflation figures is a double disappointment. The data disappoint and the reaction is clear.
After a few days of drops in USD/CAD thanks to rising oil prices, the crude reality hits.
Retail sales dropped by 0.1% in Canada, worse than a gain of 0.5% expected. This was compounded by a downwards revision for May’s data: a flat read instead of a 0.2% rise initially reported. Core sales came out even worse: a plunge of 0.8% against an expected rise of 0.3%. Also in this case, the fall came on top of a downwards revised read of 0.8% instead of 0.9% in last month’s print.
Inflation is not going anywhere fast either: headline Consumer Price Index fell by 0.2%, against expectations for a flat read. Core CPI is the only data point that did not disappoint, but it was flat, 0%, as expected.
USD/CAD was already on the rise, trading above 1.28 as the US dollar regained some of its strength. The data sent it as high as 1.2892 before things calmed down. Oil prices have also stabilized, and this is not supportive of the loonie.
More: USD/CAD: Buying Dips Trageting A Move Into Mid-1.30s In Coming Months – BofA Merrill
Resistance awaits at 1.2910 and 1.30. Support is at 1.2750. Here is the Dollar/CAD chart:
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