USDCAD Price Outlook Hinges on Canadian Retail Sales Data
Canadian Dollar (CAD) on Edge Ahead of Retail Sales Data
- Will Canadian retail sales data continue last month’s uptick?
- USDCAD testing one-month support but the pair may be oversold.
USDCAD Price Continues to Probe Support
Canadian retail sales showed a sharp uptick last month, after three prior months of negative data, and today’s figure is expected to top February’s 0.8% increase, the strongest reading since May 2018. Retail sales data can be unpredictable and volatile and a sizeable miss, either way, could set the tone for USDCAD in the coming days.
For a comprehensive guide to all this week’s data and events, you can see the DailyFX Economic Calendar
Today’s retail sales print may give a little bit more insight into next Wednesday’s Bank of Canada rate decision – expected unchanged at 1.75% - and next Friday’s Q1 2019 GDP release. The Canadian economy continues to support a robust jobs market, while inflation is currently running at 2% y/y, rising steadily from January this year.
Canadian Inflation Data
The price of oil has drifted off its late-April high and is seemingly stabilizing in a narrowing range. Important support levels near and this could affect USDCAD if these levels fail to hold. The ongoing US-China trade was will also weigh on growth concerns, and the price of oil, unless talks take a positive turn.
USDCAD has been stuck in 150 pip range since the April 24 with the lower bound now under increasing pressure. The pair have recently broken below the 20- and 50-day moving averages, adding to bearish sentiment, and now eye the May 1 low at 1.3377. A break and close below here would target 1.3335 before two old lows and the 200-day moving average between 1.3250 and 1.3283 come into focus. Downside momentum may be slowed by the CCI indicator that shows the pair in oversold territory. USDCAD traders should also take into account two Fed speakers after the retail sales release and the FOMC minutes released later in the session.
USDCAD Daily Price Chart (May 2018 – May 22, 2019)
Retail traders are 47.3% net-long USDCAD according to the latest IG Client Sentiment Data. See how recent daily and weekly positional changes affect USDCAD and currently give us a bearish contrarian trading bias.
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