USD/CAD Rips Higher After Disappointing CPI and Retail Sales Data
A slew of Canadian data was released at 8:30 EDT / 12:30 GMT, which included May CPI figures and April retail sales numbers. All these figures were disappointing and led to a continued sell-off in the CAD. Bank of Canada CPI Core (May) (YoY) came in at +1.1% versus +1.2% expected (Bloomberg News survey), from +1.1% last month. Consumer Price Index (May) (YoY) was +0.7% versus +0.9% expected (Bloomberg News survey), from +0.4%. Lastly, April retail sales numbers also missed: +0.1% actual; +0.2% expected (Bloomberg News survey); 0.0% prior).
The poor Canadian data in combination with hints at earlier QE tapering in the US has spurred large gains in the USDCAD in the last three trading days. The poor CPI data and retail sales figures signal a slowing Canadian economy. Canadian trade is heavily dependent upon the US as the US is the destination of roughly 75% of Canadian exports. The Canadian economy is largely correlated to commodity prices and the heavy recent declines in commodites offer little saving grace.
USDCAD 1-minute Chart: June 21, 2013
Charts Created using Marketscope – prepared by Kevin Jin
The 1M chart above shows little price action in the USDCAD through most of London hours. The USDCAD slowly crept its way up to $1.0400 before meeting small resistance. However, the pair easily broke through 1.0400 support after the bearish Canadian CPI and retail sales numbers were released. The move was a tremendous +75 pips (+0.76%) in about 15 minutes, at the time of writing. This upside move marks the highest level for the USDCAD since November 28, 2011.
--- Written by Kevin Jin, DailyFX Research