USD/CAD hits fresh highs at 1.3820 amid broadbased US Dollar strength

The US Dollar extends gains against the Canadian Dollar and reaches 1.3820 highs.
Better-than-expected US claims and manufacturing figures have underpinned the USD's recovery
In Canada, weak Retail Sales figures might add negative pressure on the CAD later today.

Guillermo Alcala FXStreet

The US Dollar trades higher against its Canadian counterpart for the third consecutive day on Friday, reaching session highs at 1.3820 after bouncing from 1.3625 lows after last Wednesday’s Federal Reserve’s monetary policy decision.

Strong US jobless claims figures and Philadelphia Fed Manufacturing data released eased some concerns about a sharp deterioration of the US economic outlook on Thursday and provided an additional boost to the US Dollar.

Strong claims and manufacturing data buoy the USD

Applications for unemployment benefits fell by 33K in the week of September 12 to 231K, a larger decline than the 240K anticipated by the market, following upwardly revised 261K claims in the previous week.

Later on, the Philadelphia Fed Manufacturing Survey contributed to soothing investors with a larger-than-expected improvement in the region’s manufacturing activity. The Index bounced to 23.2 after a 0.3 contraction in August, beating expectations of a 1.7 reading.

The Canadian Dollar has remained on its back foot since the Bank of Canada announced its decision to cut interest rates by 25 basis points on Wednesday, and hinted at further easing down the road.

Canadian Retail Sales, due later today, are not expected to alter this view. Consumption is expected to have contracted 0.8% in July, following a 1.5% growth in June. More bad news for the Loonie.

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.

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.

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