USD/CAD in 2018 tops beyond 1.2700 on retail sales
- Canadian retail sales contracted more than expected in December.
- US weekly initial claims beat estimates last week.
- Fedspeak should keep the attention on the buck later in the day.
The greenback is advancing further vs. its Canadian neighbour on Thursday, lifting USD/CAD to new YTD peaks in the mid-1.2700s.
USD/CAD higher on CA data
Spot gained extra upside pressure following an increasing selling bias around CAD after Canadian retail sales missed expectations in the last month of 2017. In fact, headline retail sales contracted at a monthly 0.8%, while core sales dropped 1.8% inter-month.
Today’s results added to the already softer tone around CAD this week, which is in turn helping spot to clinch its fifth consecutive daily advance so far, including fresh 2018 tops in the 1.2750 area.
In addition, US-CA yield spread differentials continue to favour the buck, particularly in the shorted end of the curve. In this regard, yields of the Canadian 2-year benchmark are currently plummeting to the vicinity of 1.79%, some 6 bp lower than session tops.
Later in the NA session, the EIA will publish its weekly report on US crude oil stockpiles. It is worth recalling that crude oil supplies dropped by just above 900K bpd according to the API’s report.
USD/CAD significant levels
As of writing the index is up 0.24% at 1.2734 and a breakout of 1.2753 (2018 high Feb.22) would open the door to 1.2920 (high Dec.19 2017) and finally 1.2927 (50% of the 2017 drop). On the downside, the initial support emerges at 1.2591 (10-day sma) followed by 1.2499 (21-day sma) and then 1.2447 (low Feb.16).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
