- USD/CAD finds support near 1.3660 on slower-than-anticipated decline in US Retail Sales data.
- Lower demand for automobiles weighs on overall consumer spending.
- Oil prices face pressure near $80.00 amid easing Middle East tensions.
The USD/CAD pair finds an intermediate support near 1.3660 as the US Census Bureau has reported that Retail Sales declined by a slower pace in October. Monthly Retail Sales contracted slightly by 0.15 against expectations of a 0.3% decline. Consumer spending was gained by 0.7% in September.
Monthly Retail Sales ex-autos rose by 0.1% while investors projected a stagnant performance. The economic data indicates that overall domestic sales were weighed down due to a sharp decline in demand for automobiles as higher borrowing costs have hit the cost of living of households.
The US headline Producer Price Index (PPI) has dropped sharply due to a sharp fall in gasoline prices. Annual headline PPI rose at a slower pace of 1.3% against estimates of 1.9% and the former reading of 2.22%. In the same period, the core PPI decelerated to 2.4% versus expectations and the prior release of 2.7%.
The US Dollar Index (DXY) attempted some recovery after the release of the US Retail Sales data. The USD Index was heavily dumped by the market participants on Tuesday as the US inflation report for October turned out softer than expected. The annual headline inflation grew by 3.2%, which was slowest in the past two years.
The core Inflation slowed to 4.0% versus. expectations and the former reading of 4.1%. A nominal slowdown in core inflation demonstrates stickiness, which remained a concern for Federal Reserve (Fed) policymakers due to which they leaned towards further policy-tightening last week. Fed Chair Jerome Powell also commented that current interest rates seem inadequate to tame price pressures.
Going forward, investors will keenly watch the outcome of the meeting between US President Joe Biden meeting with China’s President Xi Jinping at the White House.
Meanwhile, the oil price fell back after failing to extend gains above the crucial resistance of $80.00 as Middle East tensions have started easing. It is worth noting that Canada is the leading exporter of oil in the United States and lower oil prices impact the Canadian Dollar.
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