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  • USD/CAD gains after the US retail sales came better than expected.
  • Yesterday, Canadian CPI weighed on the pair.
  • Rising WTI prices also led to some bearish correction.

The USD/CAD price gains momentum as the Greenback rises after the US retail sales data came better than expected. The market expectations were -0.7%, while the figures came at 0.7%.

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The Canadian dollar rose yesterday, consolidating overnight gains. However, due to Canadian inflation data coming in above estimates, the USD/CAD pair fell yesterday from 1.2697 to 1.2614.

Statistics Canada reports: “The consumer price index (CPI) in August rose 4.1% year over year, the highest rate since March 2003, compared with a 3.7% rise in July as new price pressures accumulated and prices remained low in 2020.” The CPI rose 3.2% excluding gasoline. In August, the consumer price index rose 0.2% versus 0.6% in July. The consumer price index rose by 0.4%”.

Analysts had predicted a 3.9% rise. According to the Bank of Canada, a temporary effect of pandemic measures can lead to an increase in inflation. However, according to some analysts, inflation may not return as fast as the Bank of Canada anticipates, causing them to revise their forecast for interest rates.

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A sharp increase in WTI crude oil prices facilitated the growth of the Canadian dollar. In addition, combined with weather-related supply disruptions, the Energy Information Administration (EIA) reported stronger-than-expected reductions in crude oil inventories.

There is mixed sentiment today when it comes to global risk. China’s problems continue to weigh on Asian stocks. Another major real estate developer in China cited financial difficulties that weakened investor confidence by the crackdown on government regulators.

Traders were also intimidated by the new territory in China and the United States. The United States, the United Kingdom, and Australia have signed a security partnership to counter China’s military ambitions in the region. Beijing is unhappy with the situation.

USD/CAD price technical analysis: Upside to face 1.2700

USD/CAD 4-hour price chart
USD/CAD 4-hour price chart

The USD/CAD price has managed to break above the 20-period SMA on the 4-hour chart. The price found respite from the 50-period SMA. The pair have covered 68% average daily range so far during the NY session. It shows the price is still looking for a catalyst. The upside may face resistance at 1.2700 ahead of 1.2750.

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