USD/CAD falls further to 1.3580 on better-than-projected Canadian Retail Sales

USD/CAD dips to near 1.3580 amid multiple headwinds.
Canadian Retail Sales fell by 0.3% in June, as expected, amid weak demand for automobiles.
Investors await Fed Powell’s speech at the Jackson Hole Symposium.

Sagar Dua FXStreet

The USD/CAD pair slides further to near 1.3580 in Friday’s New York session. The Loonie asset weakens after Statistics Canada reported that monthly Retail Sales data for June came in better than projected.

Monthly Retail Sales contracted consecutively by 0.3%, as expected, due to poor demand for automobiles. While Retail Sales, excluding automobiles, unexpectedly rose by 0.3%. Economists estimated the data to decline by 0.2%. This suggests that households postponed their demand for big-ticket items to avoid higher interest obligations. This would prompt expectations of more interest rate cuts by the Bank of Canada (BoC).

Meanwhile, the market sentiment remains favorable for risky assets. S&P 500 futures have posted significant gains in the early American session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 101.40.

Going forward, the major trigger for the Loonie asset will be the Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole (JH) Symposium at 14:00 GMT. Fed Powell is expected to provide guidance on interest rates and the United States (US) economic outlook.

Market experts expect that Jerome Powell will refrain from providing a specific rate-cut path. However, he is expected to show comfort to market expectations of the Fed pivoting to policy-normalization in September. Investors would like for cues about the likely size of interest rate cuts next month.

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.