USD/CAD downside bias unchanged – UOB

In opinion of FX Strategists at UOB Group, the pair’s down trend remains intact for the time being.

Key Quotes

“The downward trend in USD/CAD remains intact. In little more than two months, the pair has fallen from 1.3789 to around 1.2540 currently”.

“Canada’s consumer prices declined 0.1% for June, in line with expectations, and the y/y rate declined to 1.0% from 1.3% previously which also met expectations. Core prices rose 0.1% on the month with the year-on-year rate unchanged at 0.9%. Excluding food and energy, prices rose 0.1% with a 1.4% increase over the year, unchanged from the previous month. Energy prices declined 2.0% on the month with an annual decline of 1.3% whilst food prices increased 0.3% on the month to give a 0.6% annual gain. There was a sharp 2.2% decline in clothing and footwear prices for the month to give a 1.7% annual decline while lower gasoline prices also pulled transportation prices lower”.

“Separately, Canada’s retail sales rose 0.6% in May which was above expectations of a 0.3% gain for the month and followed a revised 0.7% increase for April. There was a 7.3% year-on-year increase in retail sales with a 6.4% annual gain in volume terms. Underlying sales declined 0.1% on the month which was fractionally below expectations, although this followed a robust 1.3% gain for April to give a 4.0% annual increase”.

“The key Canadian release this week is May’s GDP report due on Friday”.