Dollar/CAD had an interesting week amid ups and mostly downs in oil prices and a changing market mood on trade. What’s next? The inflation and retail sales reports stand out in a double-feature Friday. Here are the highlights and an updated technical analysis for USD/CAD.
Reports that Saudi Arabia is willing to cut oil production sent oil prices and the C$ higher. However, Trump urged OPEC not to go forward and sent prices back down. Brexit also had an impact on the pair.Updates:
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Wholesale Sales: Wednesday, 12:30. Sales at the wholesale level provide some guidance for the retail level. Sales dropped by 0.1% in August, following a significant rise of 1.1% in July. We will now receive figures for September.
- Corporate Profits: Thursday, 13:30. Canadian corporations enjoyed an increase of 1% in profits during Q2, the second consecutive expansion. Data for Q3 is due now.
- BOC Financial System Review: Thursday, 13:30. The Bank of Canada publishes its overview of the financial system twice a year. Apart from data about the banks’ situation, the publication also includes economic data.
- Inflation: Friday, 13:30. Both top-tier retail sales and inflation figures are published at the same time and may have an outsized impact due to low liquidity. Headline Consumer Price Index (CPI) fell by 0.4% in September. Core CPI remained flat, also an unflattering outcome. However, other measures of Core CPI, the Trimmed, Media, and Common, remained stable around 2%. We will now get data for October.
- Retail Sales: Friday, 12:30. Back in August, Canadians squeezed their spending: retail sales slipped by 0.1% on the headline and 0.4% on the core. We will now get an update for September. While the data is lagging, consumption is of high interest and a significant deviation from expectations can certainly move the loonie.
*All times are GMT
USD/CAD Technical Analysis
Dollar/CAD moved up and broke above the 1.3220 level (mentioned last week).
Technical lines from top to bottom:
1.3350 and 1.3380 are highs last seen in the summer. 1.3295 held the pair down in mid-July. 1.3220 capped it earlier in the month.
1.3170 capped the pair in mid-August and also in late October / early November. 1.3115 held USD/CAD down on its way up in late October.
1.3050 was a low point in early November and replaces previous lines.
Below 1.3000 we find the late-October trough of 1.2970. 1.2880 was a double-bottom in September and in August.
1.2820 was a stepping stone on the way up in late May. 1.2780 was the low point in October 2018.
1.2730 provided support earlier in May. Lower, 1.2630 held the pair down back in April.
Further down, 1.25 is a critical round number and also 0.80 on CAD/USD.
I am neutral on USD/CAD
There are many factors supporting the Canadian Dollar: the USMCA, a hawkish BOC, good data. However, oil prices have a significant impact, countering the move.
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