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The Canadian economic data overview

Statistics Canada will publish domestic consumer inflation figures for June along with monthly retail sales data for the month of May at 1230 GMT this Friday. The headline CPI is expected to have risen by 2.4% y/y in June, while the broader BoC measure of core inflation is also expected to have ticked higher to 1.4% as compared to previous month’s reading of 2.2% and 1.3% respectively.  

Separately, the monthly retail sales are expected to have reversed majority of previous month’s decline and come in to show a 1.1% m/m growth for May. The measure of sales that excludes automobiles – core retail sales – is projected to have expanded by 0.7% in May, following a 0.1% contraction in the previous month.

How could the data affect USD/CAD?

Ahead of the key releases, marking the first top-tier data for the Canadian economy since the July BoC meeting, the pair has already started correcting from the 1.3300 neighborhood, or three-week tops. Stronger than expected reading(s) should prompt some additional long unwinding trade and continue exerting downward pressure, while a softer data should assist the pair to regain positive traction and assist bulls to make a fresh attempt to decisively break through the 1.3300 handle.  

Yohay Elam, FXStreet’s own Analyst explains, “1.3295 capped the pair on July 19th and is an immediate line of resistance. 1.3350 was a high point in late June and also in 2017. The 2018 peak of 1.3380 is next. Further above, the round number of 1.3500 is of importance.”

“1.3220 limited the pair’s advance in early July. 1.3105 was a low point around the same time. Close by, 1.300 worked as support early in July.  Even lower, 1.2950 was a stepping stone on the way up, back in mid-June,” he adds further.

Key Notes:

   “¢    Canadian data preview

   “¢    Canada retail sales and inflation

   “¢    USD/CAD Technical Analysis: Bulls finding it difficult to make it through 61.8% Fibo. expansion level

About the Canadian CPI and retail sales

Consumer Price Index Core is released by the Bank of Canada. “Core” CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. These volatile core 8 are considered as the key indicator of inflation in Canada. Generally speaking, a high reading anticipates a hawkish attitude by the BoC, and that is said to be positive (or bullish) for the CAD.

The Retail Sales released by the Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.