USD/CAD – Sharp US retail sales weigh on Canadian dollar

The Canadian dollar is down considerably in the Wednesday session, erasing the gains which marked Tuesday. Currently, USD/CAD is trading at 1.3144, up 0.67% on the day. On the release front, there are no Canadian events. In the U.S, retail sales were unexpectedly strong. Retail Sales jumped 0.6%, above the estimate of 0.3%. Core Retail Sales climbed 0.5%, crushing the forecast of 0.1%.

After an uneventful start to August, the Canadian dollar recorded strong losses last week and has continued to show volatility this week. The Canadian dollar remains under pressure, and USD/CAD touched a high of 1.3175 earlier on Wednesday, its highest level since July 16. Strong U.S data continues to boost the greenback, and this was the case on Wednesday, as US retail sales and manufacturing data beat expectations.

Negotiations over NAFTA have progressed slowly, but policymakers in Canada and Mexico are hopeful that the flexibility that the U.S has shown towards the European Union will extend to NAFTA as well. Canadian and Mexican officials are hoping to reach an agreement, despite U.S President Trump’s stated preference for bilateral agreements. NAFTA is a key component of the Canadian economy and with 80% of the country’s exports headed the U.S., the lingering delays in reaching a new NAFTA accord have weighed on the Canadian dollar. If the parties are able to reach a new agreement, traders can expect the Canadian dollar to move higher. The three sides continue to hold talks, with senior officials huddling in Mexico City on Wednesday.

USD/CAD Fundamentals

Wednesday (August 15)

• 8:30 US Core Retail Sales. Estimate 0.3%. Actual 0.6%
• 8:30 US Retail Sales. Estimate 0.1%. Actual 0.5%
• 8:30 US Empire State Manufacturing Index. Estimate 20.1
• 8:30 US Preliminary Nonfarm Productivity. Estimate 2.4%
• 8:30 US Preliminary Unit Labor Costs. Estimate -0.1%
• 9:15 US Capacity Utilization Rate. Estimate 78.2%
• 8:15 US Industrial Production. Estimate 0.3%
• 10:00 US Business Inventories. Estimate 0.2%
• 10:00 US NAHB Housing Market Index. Estimate 67
• 10:30 US Cude Oil Inventories. Estimate -2.6M
• 16:00 US TIC Long-Term Purchases. Estimate 32.3B

Thursday (August 16)

• 8:30 Canadian Manufacturing Sales. Estimate 1.0%
• 8:30 Canadian ADP Nonfarm Employment Change
• 8:30 US Building Permits. Estimate 1.31M
• 8:30 US Housing Starts. Estimate 1.27M
• 8:30 US Philly Fed Manufacturing Index. Estimate 21.9
• 14:00 US Unemployment Claims. Estimate 215K

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, August 15, 2018

USD/CAD, August 15 at 13:15 DST

Open: 1.3057 High: 1.3175 Low: 1.3050 Close: 1.3142

USD/CAD Technical

USD/CAD posted small gains in the Asian and European sessions. The pair has posted further gains in North American trade

• 1.3067 is providing support
• 1.3160 is the next resistance line
• Current range: 1.3067 to 1.3160

Further levels in both directions:

• Below: 1.3067, 1.2970, 1.2831 and 1.2733
• Above: 1.3160, 1.3292 and 1.3436

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