USD/CAD bonces above 1.2850 as core retail sales missed

  • Canada’s core retail sales fell short of expectations falling -0.3% m/m in April.
  • The Bank of Canada core inflation accelerated to 1.5% y/y, inching above expectations. 
  • The Loonie fell more than 50 pips on the Canadian news. 

The USD/CAD is trading at around 1.2866 up 0.53% on Thursday as the combination of Canadian retail sales and inflation disappointed, especially with core retail sales missing. 

Canada’s retail sales month-on-month came above expectations at 0.6% versus 0.4% forecast in April with core retail sales coming below expectations at -0.3% versus 0.5% month-on-month. The Bank of Canada Consumer Price Index Core year-on-year in April came above  expectations at 1.5% against 1.4% expected by analysts. The USD/CAD in an immediate reaction bounced more than 50 pips and is now trading in the 1.2850 region.

The Loonie found a ceiling in Asia just below 1.2850 and then lost about 60 pips to the downside ahead of the Canadian data. 

On the larger picture, the US dollar remains strong as the US Dollar Index (DXY), which measures the greenback versus a basket of currencies, made a new multi-week high at 93.64 on Friday on the back of rising US Treasury yields. 

USD/CAD 4-hour chart 

The trend is neutral and the support is seen at the 1.2747 swing low and at 1.2727 cyclical low while resistances are seen at 1.2848 and 1.2926 swing high. The Loonie is trading above its 200-period simple moving average (SMA) but below its 50 and 100-period SMA suggesting a mild upward bias.

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