Dollar/CAD was on an uptrend reaching the highest since June 2017 due to dovish words by Poloz, tweets by Trump and poor Canadian data. What’s next? The inflation and retail sales reports on Friday are the main events. Here are the highlights and an updated technical analysis for USD/CAD.
BOC Governor Poloz said that the Canadian economy can continue growing on and on without creating too much inflation and that the BOC is obliged to let it run. This hurt the loonie. Later on, Trump insisted that Canada had a trade surplus with the US, aggravating tensions. A Mexican comment about NAFTA without the US also weighed on the Canadian dollar. Data in Canada was not too encouraging either, with a second consecutive drop in new home sales.
Updates:
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
Wholesale Sales: Tuesday, 12:30. Sales at the wholesale level serve as a warm-up for the retail sales report later on. After a drop of 0.5% in December, the report for January is expected to show a gain of 0.1%.
Carolyn Wilkins talks Thursday, 18:45. The Deputy Governor of the BOC will give a speech in Toronto and may refer to the current concerns about trade and also monetary policy. Wilkins has moved the C$ in the past.
Inflation data: Friday, 12:30. The Bank of Canada wants to let inflation run, but will it indeed move forward? After a significant rise of 0.7% in January, headline CPI is forecast to rise by only 0.4% this time. Core CPI rose by 0.5%. The BOC also publishes its other various measures of core inflation: Trimmed, Median and Common.
Retail sales: Friday, 12:30. Consumers did not do extensive Christmas shopping: the 0.8% fall in retail sales sent the C$ plunging. A significant recovery worth 1.1% is on the cards now. Core sales are projected to rise by 0.9% after falling by 1.8% last time.
All times are GMT
USD/CAD Technical Analysis
Dollar/CAD had only one direction: up. After some hesitation, it broke above 1.30 (mentioned last week) and left dust behind it.
Leave A Comment