USD/CAD remains below 1.2100 after the better-than-expected Canadian inflation data. According to Statistics Canada, retail sales rose by 3.6% in March on a month-on-month basis. Analysts had expected a reading of 2.3% compared to the prior month’s 4.8%. With the exclusion of food and energy, the core retail sales reading came in at 4.3% MoM compared to the forecasted 2.2%.
The data comes two days after the release of the country’s CPI numbers. Statistics Canada noted that consumer prices rose by 0.5% MoM, which matches the prior month’s figure but is higher than the expected 0.4%. At an annualized rate, core CPI is at 2.3% compared to the prior month’s 1.4%. The Canadian dollar is finding support in the better-than-expected inflation numbers, which explains the lack of enough momentum for USD/CAD to hit 1.2100.
Furthermore, as a commodity currency, the Canadian dollar is finding support in the rising crude oil prices. WTI futures ended the week at $63.85, up from 3.11%. However, the price is still significantly lower than the week’s high of $67. The Bank of Canada’s inflation target is 2%. However, price pressures are likely to exceed that target temporarily.
On the side of the US dollar, the existing home sales data came in lower-than-expected at 5.85 million. Analysts had expected a reading of 6.09 million. However, the preliminary service PMI numbers were better than expected at 70.1 compared to the forecasted 64.5. The manufacturing PMI figure of 61.5 is higher than the predicted 60.2. Notably, a figure above 50 indicates the sector’s expansion.
USD/CAD Technical Outlook
In Friday’s session, USD/CAD lacked enough momentum to rebound to the intraday high of 1.2095. the currency pair closed at 1.2067, up by 0.07%. However, on an hourly chart, it remains slightly below the five and ten-week exponential moving averages.
At the beginning of the coming week, I expect USD/CAD to decline to 1.2050. Below that level, the next support level will likely be at 1.2020. On the flip side, the bulls may gather enough momentum to retest 1.2095 where it will experience resistance.