Dollar/CAD was relatively stable amid the global storm triggered by Turkey. Hopes for a NAFTA deal continued underpinning the Canadian Dollar. What’s next? The retail sales report stands out. Here are the highlights and an updated technical analysis for USD/CAD.
Turkey was the center of attention as the crisis there triggered fear of a wider slowdown in emerging markets. While the Australian and New Zealand dollars dropped, the Canadian one was stable and enjoyed the ongoing NAFTA negotiations. Canadian inflation beat expectations with 0.5% m/m and it may not be directly related to the US tariffs. This helped boost the C$.
Updates:USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- Carolyn Wilkins talks: Monday, 13:15. The Deputy Governor of the Bank of Canada will attend a conference in Frankfurt and will be able to respond to the latest strong inflation numbers coming out of Canada and the global environment.
- Wholesale Sales: Tuesday, 12:30. Sales at the wholesale level reflect expectations for sales at the retail level which already represent the broader economy. The volume of wholesale sales increased by a robust 1.2% in May, double the expectations. We will now get the figures for June.
- Retail Sales: Wednesday, 12:30. Canada usually releases the retail sales report alongside the inflation data. This time, the important consumer figure has the all the attention. The report for May was quite encouraging with headline retail sales advancing by 2% and core sales moving up by 1.4%. The publication for June may see a setback.
- Corporate Profits: Thursday, 12:30. PRofits of Canadian corporates rose by 2.7% in Q1 2018 after dropping in the last quarter of 2017. The report for Q2 may show another increase.
*All times are GMT
USD/CAD Technical Analysis
Dollar/CAD traded around the 1.3070 line (mentioned last week) during a significant part of the week.
Technical lines from top to bottom:
1.3385 was the peak on two occasions in late June. 1.3350 follows close by after serving in both directions in July 2017.
1.3295 held the pair down in mid-July. 1.3220 capped it earlier in the month.
1.3170 served as resistance in mid-August. 1.3070 was a swing low in mid-July. 1.3030 provided some support in late July.
Below 1.3000 we find the mid-August trough of 1.2960. 1.2820 was a low point for USD/CAD in early June and the last line, for now, is 1.2730 which supported the pair in May.
I turn from neutral to bearish on USD/CAD
The Canadian Dollar showed its resilience in weathering the global storm. It could gain ground against the greenback if the latter takes a breather.