Canadian Wholesale Sales is an important indicator of consumer spending. A reading which is better than the market forecast is bullish for the Canadian dollar.
Update: Canadian wholesale sales plunge 3.1%
Here are all the details, and 5 possible outcomes for USD/CAD.
Published on Wednesday at 12:30 GMT.
Indicator Background
Canadian Wholesale Sales measures the total amount of sales in the wholesale sector, and an increase in the indicator points to stronger consumer spending, a key component of economic growth.
Wholesale Sales rebounded sharply in December, posting an excellent gain of 2.5%. This crushed the estimate of 0.4%. The markets are bracing for a strong downturn in the January report, with an estimate of -0.7%.
Sentiments and levels
With the US Federal Reserve expected to remove “patient” in their language at the upcoming policy meeting, we could see the greenback post more gains against the sluggish Canadian dollar. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.3063, 1.2924, 1.2798, 1.2624, 1.2541, and 1.2387.
5 Scenarios
- Within expectations: -1.0% to -0.4%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: -0.3% to 0.1%: An unexpected higher reading can send the pair below one support line.
- Well above expectations: Above 0.1%: In this scenario, a second support level might be broken as a result.
- Below expectations: -1.5% to -1.1%: A weak reading could cause the pair to climb and break one resistance line.
- Well below expectations: Below -1.5%. A sharp contraction could hurt the loonie and USD/CAD could break above a second resistance line.
For more on the loonie, see the USD/CAD forecast.
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