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Canadian retail sales dropped by 0.1%. They were expected to rise by 0.3% in October after a rise of 1% in September. Core sales surprised to the upside by rising 0.4%. They were expected to remain flat once again. The Consumer Price Index (CPI) saw expectations for a correction: a rise of 0.2% in November after a drop of the same scale in October. However, it remained flat. Core CPI was forecast to rise by 0.1% after 0.2% beforehand but actually dropped by 0.1%. Low inflation or even deflation remains a fear in Canada after it fell to 0.7% in October. The annual inflation rate stands at 0.9% and at 1.1% for the core figure.

USD/CAD traded around 1.0685 towards the publication, rising from support at 1.0660 and now extends its gains and hits 1.0720. It is very close to the previous peak. Will the Canadian dollar fall to new multi-year lows against the greenback?

Update: USD/CAD reached a new 3 year high of 1.0736 before retreating. Resistance is at 1.0780. For all the levels and analysis, see the USDCAD forecast.

The pair peaked at 1.0726 after the Fed announcement of QE tapering.

At the same time, the US published final GDP and other figures. Final US GDP was upgraded to an annual level of 4.1%.