USD/CAD leaps above 1.27 on dismal retail sales data from Canada

Canadian retail sales data misses market expectations.
DXY treads water above 93 in thin holiday trading.
WTI consolidates recent gains above $58.

Eren Sengezer FXStreet

The USD/CAD pair jumped 50 pips in a matter of minutes and broke above the 1.27 mark after the data from Canada failed to meet market estimates. At the moment, the pair is trading at 1.1.2717, adding 0.17% on the day. The pair's unusually strong reaction to the data seems to be a product of the low trading volume on Thursday.

Oil's rise caps USD/CAD's upside

According to the data released by the Statistics Canada, retail sales increased by 0.1% to $49.1 billion on a monthly basis in September and came in below experts' estimate of 0.9%. Moreover, August data revised down to -0.1%.

In the meantime, following yesterday's impressive rally, the barrel of West Texas Intermediate continued to edge higher today amid heightened expectations of the OPEC/non-OPEC output cut deal getting extended in next week's meeting in Vienna. At the moment, the barrel of WTI is trading at its highest level since June 2015 at $58.20, helping the commodity-sensitive loonie show some resilience against the buck. Oil prices are likely to stay as the sole driver of the price action with American investors enjoying their holiday.

Technical outlook

Despite that recent upsurge, the RSI indicator on the daily graph continues to move sideways near the 50 mark, suggesting that the pair is struggling to gain momentum in either direction. The initial resistance for the pair could be seen at 1.2750 (20-DMA), ahead of 1.2800 (psychological level) and 1.2900 (200-DMA). On the downside, supports align at 1.2650 (50-DMA), 1.2560 (100-DMA) and 1.2500 (psychological level).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD falls from 0.7050 amid Iran uncertainty

AUD/USD is back in the red, falling from 0.7050 in the Asian session on Friday, reversing the previous day's goodish rebound from a nearly two-month low amid a modest US Dollar uptick. Iran downplayed Trump's claim that a deal has been approved and said that key issues, including the Strait of Hormuz and frozen funds, remain unresolved. This keeps a lid on optimism, which, along with Fed rate-hike bets, revives USD demand and weighs on the pair.

USD/JPY recovers above 160.00 as Mideast woes persist ahead of BoJ

USD/JPY recovers ground above 160.00 in the Asian session on Friday. Economic risks due to uncertainty in the Middle East undermine the Japanese Yen, while lifting the safe-haven US Dollar (USD) amid the US-Iran standoff. This acts as a tailwind for the pair, though fears of intervention could limit deeper JPY losses and cap the pair's rebound ahead of the BoJ meeting next week.

Gold drops below $4,200 as Iran risks, Fed bets support USD

Gold is reversing the previous day's strong recovery from the YTD low and drops back below $4,200 in the Asian session on Friday. Despite Trump's claim that a peace deal with Iran has been approved, a standoff over the Strait of Hormuz and Tehran's frozen funds keep a lid on the latest optimism, injecting fresh life into the US Dollar bulls. The Greenback also draws support from hawkish Fed bets, following hot US inflation data.