Head of FX Strategy, Saxo Bank Group
Weak Canadian data puts CAD back on defensive. CAD is towards the day’s lows against the US dollar after the key Canadian data releases today, showing March Retail Sales ex Autos at an ugly -0.2% month-on-month despite the strong +0.6% headline growth.
The April CPI was mostly in-line, with the core and “trim” matching expectations at +1.9%/+2.1%, but the headline missed slightly at 2.2% vs. 2.3% expected. Today’s data set perhaps marginally lowers the odds that the Bank of Canada moves ahead with a rate hike at the next meeting on May 30, which was priced before the data at about 33% likely.
USDCAD looks ready to join the other USD pairs in rallying if the pair can clear the 1.3000 area that recently provided resistance at the top of the range and has a long history as a pivot zone. Working against CAD bears has been the very high oil prices, but these look severely overbought. We are on the lookout for testing 1.3000+ on a strong close near 1.2900 or higher today.
(Chart Source: Saxo Bank)