USD/CAD holds key support of 1.3700 ahead of US Retail Sales


  • USD/CAD holds its key support of 1.3700 with eyes on monthly US Retail Sales data for May.
  • While the Fed advocates one rate cut this year, traders have priced in two.
  • The BoC may extend its policy-easing spell in July.

The USD/CAD pair remains well-supported above the round-level cushion of 1.3700 in Tuesday’s European session. The Loonie asset holds gains as the US Dollar (USD) rebounds after a slight corrective move. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains above 105.00 as Federal Reserve (Fed) policymakers continue to advocate for one rate cut this year.

Fed officials have acknowledged the cooler-than-expected consumer and producer inflation reports but don’t want to rush to reduce interest rates before they see inflation declining for months to gain significant confidence.

Contrary to the Fed’s latest interest rate projections, market speculation for two rate cuts this year have strengthened. The CME FedWatch tool shows that the rate-cut process will begin from the September meeting and there will be subsequent rate cuts in the November or December meeting.

Meanwhile, investors shift focus to the United States (US) Retail Sales data for May, which will be published at 12:30 GMT. The Retail Sales data—a key measure of consumer spending—is estimated to have increased by 0.3% after remaining stagnant in April. Robust consumer spending indicates a stubborn inflation outlook and will diminish hopes of rate cuts in September, while soft numbers will do the opposite.

On the Loonie front, rising expectations that the Bank of Canada (BoC) will cut interest rates further in the July meeting have kept the Canadian Dollar on the backfoot. The BoC delivered a rate cut of 25 basis points (bps) in its June policy meeting, as expected. BoC’s preferred inflation measure- the core Consumer Price Index (CPI), which excludes various volatile items- has come down below the 2% target, and the Unemployment Rate has risen to 6.2%, which forced the BoC to start unwinding the restrictive interest rate framework.

USD/CAD

Overview
Today last price 1.3736
Today Daily Change 0.0012
Today Daily Change % 0.09
Today daily open 1.3724
 
Trends
Daily SMA20 1.3696
Daily SMA50 1.3694
Daily SMA100 1.3607
Daily SMA200 1.3582
 
Levels
Previous Daily High 1.3764
Previous Daily Low 1.3721
Previous Weekly High 1.3792
Previous Weekly Low 1.368
Previous Monthly High 1.3783
Previous Monthly Low 1.359
Daily Fibonacci 38.2% 1.3738
Daily Fibonacci 61.8% 1.3748
Daily Pivot Point S1 1.3708
Daily Pivot Point S2 1.3693
Daily Pivot Point S3 1.3665
Daily Pivot Point R1 1.3752
Daily Pivot Point R2 1.378
Daily Pivot Point R3 1.3795

 

 

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