The U.S. is printing its closely-watched retail sales release today.
Do you think the report will extend the dollar’s weakness against the Loonie?
I don’t know if you were around during the U.S. session but Bank of Canada (BOC) Governor Macklem jawboned the Canadian dollar by saying that further gains would have “material impact” on their export and maybe growth projections.It also didn’t help that prices of crude oil – one of Canada’s biggest exports – dipped as India’s coronavirus crisis deepened and a key U.S. pipeline resumed operations and eased the oil price spike that we saw earlier this week.
The Loonie weakness pushed USD/CAD up around 150 pips higher from its weekly lows. It’s now near the 1.2170 zone that lines up with the 200 SMA and a trend line resistance that’s been valid since late April.
Will today’s retail sales release extend the dollar’s losses against the Loonie? Word around is that we could see upside surprises with such a lowkey expectation and a strong CPI report.
If we see a much strong retail sales activity, then traders could worry about the added pressure on the Fed to ease their stimulus measures. Ditto for much weaker retail sales numbers, which could inspire risk aversion and push the safe-haven dollar higher across the board.
Meanwhile, so-so retail sales data could inspire risk appetite that would extend the Loonie’s rally against the dollar. Look out for a trip back to weekly lows or even new May lows in case we see enough momentum.
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