Unlike what we might think, the energy-related Canadian dollar boost from continued crude oil prices rise is lively. Indeed, though the performance in USD/CAD remains rather subdued started in April 2018 due to a strong USD rally since mid-March 2018, things look a bit different when looking at CAD performance against other major currencies. The strength in loonie is particularly interesting when looking at the development in CHF/CAD, CAD/JPY and EUR/CAD for which the CAD gained ground by +5.12%, +5.08% and +4.78% respectively. Accordingly, the impression of a non-commodity impact is misleading. On the contrary, the CAD robust performance against the greenback should be praised.

Key data releases in Canada will concern April consumer price index and retail sales. Inflation readings are expected to remain stable at +0.30% m/m and +2.30% y/y along with a slight increase of +0.50% in core retail sales (prior: 0%).

Looking forward, we would favor a USD/CAD pullback in the short-term, strongly influenced by positive Canadian data releases and weakening USD momentum. Currently given at 1.2809, USD/CAD is trading sideways, expected to head along 1.2850 in the short-term.

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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