Canadian Dollar lags on mixed Friday data prints

The Canadian Dollar treaded water to wrap up the trading week.
Canada saw a slight decline in home prices, Retail Sales meet expectations.
Broad-market sentiment supports the Greenback, limiting Loonie options.

Joshua Gibson FXStreet

The Canadian Dollar (CAD) waffled into the midrange on Friday, testing into the low side but ultimately getting hamstrung as Canadian data comes in mixed and gets overshadowed by sentiment-bolstering US data prints.

Canada saw an unexpected contraction in its New Housing Price Index in October, a welcome sign for Canadians suffering under the weight of home prices that have outrun income for decades despite investors not being able to rely on forever-increasing home prices for investment returns. Headline Canadian Retail Sales came in at expectations, though core Retail Sales excluding automobile purchases accelerated in September.

Daily digest market movers: Canadian Dollar sticks to the midrange on mixed economic data

Canada’s New Housing Price Index contracted by 0.4% MoM in October, down from the last print of a flat 0.0%, while investors were hoping for a 0.1% uptick. Despite the near-term downtick, Canada’s New Housing Price Index is still up 0.8% YoY.
Canadian Retail Sales printed unchanged at 0.4% MoM in September, as markets expected.
Core Canadian Retail Sales excluding automobile purchases lurched high to 0.9% MoM, walking back the previous month’s -0.8% contraction and stepping over the median market forecast of 0.5%.
Market data reactions were fully absorbed by US Purchasing Managers Index (PMI) survey results that came in higher across the board, bolstering the US Dollar and limiting upside potential for the Loonie.
It’s a quiet data docket on the cards for next week: Canada is almost entirely absent from the calendar schedule until next Friday’s Gross Domestic Product (GDP) update, with US GDP and Personal Consumption Expenditures Price Index (PCEPI) due on Wednesday.

Canadian Dollar price forecast

The Canadian Dollar (CAD) found a brief reprieve from Greenback strength this week, paring away recent losses and dragging the USD/CAD chart back below the 1.4000 handle. Despite a recovery in the Loonie’s stance, the pair remains close to recent highs as broad-market bids prop up the US Dollar.

USD/CAD is running the risk of rolling over into a fresh round of Canadian Dollar strength after bulls ran aground of a long-term sideways channel. However, near-term price action has yet to give up ground as bids battle it out well above the 50-day Exponential Moving Average (EMA) near 1.3830.

USD/CAD daily chart

Economic Indicator

Retail Sales ex Autos (MoM)

The Retail Sales ex Auto data, released by Statistics Canada on a monthly basis, measures the total value of goods sold by retailers in Canada excluding the key sector of motor vehicles and parts. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales values in the reference month with the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.