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Canadian data all came out above expectations: retail sales rose by 1.1%, core sales by 0.7%. CPI jumped to 2.3% y/y and Core CPI to 1.7%. The weaker Canadian dollar may have helped, and now it’s rising back up.  Canada was expected to report an advance of 0.4% in retail sales in May after a drop of 0.1% in April. Core sales were expected to rise at the same scale of 0.4% after a minimal rise of 0.1% previously. CPI was expected to  rise from 2% to 2.1% y/y or 0.3% m/m. Core CPI was expected to advance from 1.4% to 1.5%.

USD/CAD was hovering above the lows, at 1.0820 before  the publication.  The pair is now trading just above support at 1.0780. Everything went in the same direction.

Update: 1.0780 is lost ads the pair drops below the level. The new low at the time of writing is 1.0775.

Month over month, prices rose by 0.5% and so did core CPI. The annual level of core CPI is now close to the “holy grail” of 2% in inflation. It will be hard for the BOC to remain dovish on such figures.

The Canadian dollar enjoyed the turmoil in Iraq as well as the FOMC statement, which left nothing for the USD bulls. The  weakness of the US dollar was wide, but some currencies enjoyed it more than others. The  C$ had limited success in riding this wave.

Support awaits at 1.0780, followed by 1.0660. Resistance stands at 1.0850 followed by 1.0920. For more, see the  Canadian dollar prediction.