Canadian Dollar eyes Retail Sales ahead of rate meeting
|The Canadian dollar is calm on Friday. In the European session, USD/CAD is trading at 1.3717, up 0.08% on the day at the time of writing. We could see stronger movement in the North American session, with the release of Canadian retail sales.
Will Retail Sales suffer a reversal?
Canada’s retail sales is expected to regress in June after a strong reading a month earlier. The market estimate stands at -0.6% m/m, after a gain of 0.7% in May. Annually, retail sales sparkled with a gain of 1.8%.
Today’s retail sales report is the final key release ahead of the Bank of Canada’s meeting on July 24. The BoC is widely expected to cut interest rates for a second straight month after last week’s positive inflation report. Inflation fell from 2.9% to 2.7% y/y in June and CPI declined by 0.1% on a monthly basis, the first decline since December 2023. Core CPI also decreased slightly.
The BoC has already demonstrated that it is ready, willing and able to cut rates as both headline and core inflation are within the 1% to 3% target range. Households and businesses are looking for more relief from high interest rates and the central bank will need to continue lowering rates in order to avoid a recession.
In the US, unemployment claims jumped to 243 thousand last week, up from a revised 223,000 in the previous release and higher than expectations. The increase is another indication that the labor market has been softening, which supports the case for a rate cut. The markets have priced in a 95% probability a rate cut in September, according to CME’s FedWatch.
USD/CAD technical
-
USD/CAD is testing resistance at 1.3727. Close by, there is resistance at 1.3747.
-
There is support at 1.3698 and 1.3678.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.