USD/CAD turns upside down on steady Canadian Retail Sales growth, US Dollar retraces
- USD/CAD ticks down after the Canadian Retail Sales data came in line with expectations and the prior release.
- Steady Canadian Retail Sales growth would weigh on BoC's large rate-cut bets.
- Investors await the flash US S&P Global PMI data for November.
The USD/CAD pair surrenders its entire intraday gains and ticks down as the Canadian Retail Sales data grew steadily in September and the US Dollar (USD) gives up a majority of its intraday gains after refreshing a two-year high.
Statistics Canada showed that Retail Sales, a key measure of consumer spending that drives inflation, rose by 0.4%, in line with estimates for the month. Steady sales were driven by higher spending on food and beverages, while sales receipts at gasoline stations were lower. Steady growth in the consumer spending measure is expected to weigh on market expectations that the Bank of Canada (BoC) will cut interest rates consecutively for the second time by 50 basis points (bps).
Market speculation for BoC outsize interest rate cuts was already diminished slightly after the release of the Consumer Price Index (CPI) data for October, which showed that price pressures accelerated at a faster-than-expected pace.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drops from 108.00 to near 107.50.
The outlook of the US Dollar remains firm as investors expect that the Federal Reserve (Fed) will be one of those central banks among Group of Seven (G7) nations, which will follow a more gradual approach. Market expectations for the Fed to cut interest rates slowly are strengthened on expectations that the United States (US) inflation and economic growth will accelerate after President-elect Donald Trump implements his trade and tax policies.
Going forward, investors will pay close attention to the US flash S&P Global Purchasing Managers’ Index (PMI) data for November, which will be published at 14:45 GMT.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
