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.
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.
