USD/CAD holds gains above 1.3900 with Canada’s Retail Sales, Fed Powell on focus

The US Dollar remains bid ahead of Powell's speech at Jackson Hole.
Traders are waiting for a confirmation of an interest rate cut in September.
In Canada, June's retail Sales figures are expected to show a significant recovery in June.

Guillermo Alcala FXStreet

The US Dollar is trading higher for the fifth consecutive day against its Canadian counterpart on Friday. The pair hit a fresh three-month high at 1.3917 earlier on Friday, while downside attempts remain limited above the 1.3900 round level.

A moderate risk-averse sentiment is underpinning the US Dollar as investors hold their breath ahead of Fed Powell’s speech at the Jackson Hole meeting. With the market pricing in a 75% chance of a rate cut in September, the risk of hawkish Powell sticking to his “patience” message and warning about inflationary risks from tariffs keeps traders on their heels.

Recent comments from Fed speakers have failed to give any clear sign. Cleveland Fed President Hammack said she would not see a case for a rate cut in September, while Boston Fed President Collins showed openness to easing monetary policy amid increasing risks of a weakening labour market.

The Canadian Dollar, on the other hand, remains vulnerable amid the depressed Oil prices, with risks of a trade war with its southern neighbour looming. In the calendar today, June’s Retail Sales numbers are expected to show a significant recovery, following a 1.1% contraction in May.

Economic Indicator

Fed's Chair Powell speech

Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.

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.

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