Loonie Takes the Spotlight On Friday

A pair of high-profile reports from Canada will headline the economic calendar on Friday, as currency traders wrap up an active week that has been increasingly dominated by the US dollar. 

The European session begins in earnest at 06:00 GMT with a report on German producer inflation. The producer price index (PPI) likely rose 0.2% in June following a 0.5% increase the month before. In annualized terms, German PPI is projected to rise 2.9%.

In Brussels, the European Commission’s statistical agency will report on the current account balance at 08:00 GMT. The current account surplus is forecast to fall to a seasonally adjusted €27.2 billion in May compared with €28.4 billion in April.

In the United Kingdom, the Office for National Statistics will report on public sector net borrowing at 08:30 GMT. Overall debt levels are projected to rise to £3.6 billion in June compared with £3.35 billion the previous month.

The government of Canada will report on consumer inflation and retail sales in two separate reports at 12:30 GMT. The consumer price index (CPI), a key measure of inflation, likely rose 0.3% for June following a 0.1% uptick the month before. In annualized terms, this translates into a growth rate of 2.5%. Meanwhile, the Bank of Canada’s core consumer price index is forecast to read 1.4%.

Retail sales, a proxy for consumer spending, likely flat-lined for May after falling sharply the month before. Excluding the volatile automobile component, receipts are projected to rise 0.5%.

Commodity traders will also be keeping a close eye on Baker Hughes’ weekly oil rig count, which is an important indicator of US shale activity.

EUR/USD

Europe’s common currency swung sharply lower in the previous session, with prices falling below 1.1600 for the first time in three weeks. EUR/USD bottomed below 1.1590 before rebounding sharply later in the session. The pair now trades at 1.1639, where it risks a double-top formation. Prices must, therefore, break higher to avoid this ominous setup.

GBP/USD

It has been a volatile week for cable, with prices falling toward the lowest levels of the year. GBP/USD broke below 1.3000 on Thursday for the first time since August. The pair has since reclaimed that level, though the general trend remains bearish. Immediate resistance is located at 1.3049, the low from 28 June. On the opposite side of the spectrum, immediate support is located at 1.2957, the current year-to-date low. A breakdown below that level would likely expose the 24 August low of 1.2774.

USD/CAD

The North American cross is beholden to economic data in the final session of the week. The US dollar got the upper hand on its northern counterpart Thursday, as prices edged closer to the 1.3300 handle. USD/CAD is currently trading at 1.3278, with immediate resistance located at the psychological 1.3300.