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USD/CAD Continues the Bounce Higher After MAs Hold As Support

Posted Friday, August 19, 2022 by
Skerdian Meta • 2 min read

Retail sales have become a main indicator of the economy, and consequently for the movement of currencies. Additionally, they can swing market sentiment, particularly if it’s a major economy that’s reporting. Tomorrow there are two currency majors reporting the latest figures, and that could shake up their respective pairs a bit.

Retail sales figures are particularly important now that fuel prices are coming down. The underlying components show how the consumer side of the economy is being impacted by inflation. Central banks – particularly relevant to the data tomorrow, the BOE and BOC – are going all-in on fighting inflation. Demand is one of the driving forces of inflation.

USD/CAD Daily Chart – MAs Held As Support

Bouncing off moving averages as USD resumes the uptrend

Although, USD/CAD reversed higher this week even before the retail sales report from Canada was released. The US retail sales released earlier this week were positive, which sent the USD higher.

Canada Retail Sales for June 2022

Canada retail sales higher than expected

Canada retail sales for June 1.1% vs. 0.3 expected
Prior month revised higher to 2.3% from 2.2%
Canada retail sales for June rose 1.1% vs. 0.3% estimate

Ex autos 0.8% vs. 0.9% estimate
Sales were up in 8 of 11 subsectors representing 76.8% retail trade
Gains were led by higher sales and gasoline stations (+3.9% – up for 6 consecutive increase) and motor vehicle and parts dealers (+1.8%) with new car dealers at +2.9% leading the way
In volume terms of retail sales were up 0.2% June
Retail sales were up 3.2% in the 2nd quarter and 0.9% on volume terms
July retail sales expected to decline by -2.0% in the prerelease estimate from StatCan.This unofficial estimate was calculated based on responses received from 36.5% of companies surveyed.

Better data for June, but July is not looking so great at -2.0%. Gains were pushed higher by inflation as well. Nevertheless the Canadian dollar has moved little higher (USDCAD lower). For the day, however, the USDCAD is still higher. This week the USDCAD has moved up 4 of 5 trading days. Last Friday the currency pair closed at 1.2772. It is currently trading at 1.2984 after reaching a high today of 1.3002. The natural resistance level at 1.3000 is helping to put a lid on the pair at least for now.