- USD/CAD struggles to attract buyers and consolidates in a range on the last day of the week.
- Bulls seem unaffected by some follow-through USD strength and a further slide in Oil prices.
- Traders look to Canadian Retail Sales and speeches by FOMC members for a fresh impetus.
The USD/CAD pair seesaws between tepid gains/minor losses during the Asian session on Friday and consolidates its recent recovery gains from sub-1.3600 levels, or a three-month low touched last week. Spot prices currently trade around the 1.3700 mark, nearly unchanged for the day, and remain on track to register weekly gains for the first time in the previous six.
The US Dollar (USD) is seen building on the previous day's goodish rebound from over a three-month low and turning out to be a key factor acting as a tailwind for the USD/CAD pair. The Conference Board's leading index fell for the fourth straight month in June and pointed to a slowdown in the US economic growth. This comes on top of worries about a slowdown in China – the world's second-largest economy – and tempers investors' appetite for riskier assets, which is seen benefitting the safe-haven Greenback.
Meanwhile, a stronger buck dents demand for USD-denominated commodities, including Crude Oil prices. This, in turn, seems to undermine the commodity-linked Loonie and further lends support to the USD/CAD pair. That said, the lack of strong follow-through buying warrants some caution for bullish traders amid bets that the Federal Reserve (Fed) will start cutting interest rates in September. Traders also seem reluctant and prefer to wait on the sidelines ahead of the Bank of Canada (BoC) meeting next Wednesday.
Heading into the key central bank event risk, investors on Friday will take cues from the release of Canadian Retail Sales data, which, along with Oil price dynamics, should influence the Canadian Dollar (CAD). Furthermore, Fedspeak and the broader risk sentiment will drive the USD demand, which should provide some meaningful impetus to the USD/CAD pair and contribute to producing short-term opportunities.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by Statistics Canada on a monthly basis, measures the total value of goods sold by retailers in Canada based on a sampling of retail stores of different types and sizes. 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.
Read more.Next release: Fri Jul 19, 2024 12:30
Frequency: Monthly
Consensus: -0.6%
Previous: 0.7%
Source: Statistics Canada
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