USD/CAD free fall continues after strong wholesale sales data

The USD/CAD is down by more than 0.15% mostly because of the weaker US dollar. The pair is trading at 1.3150, which is the lowest it has been since January 29^th this year.

Canada inflation disappoints

Things have worked well for Canada in recent weeks. The number of coronavirus cases in the country has been in a downward trend and economic numbers have been relatively strong. Yesterday, the country confirmed about 669 coronavirus infections. At its peak, the country was reporting more than 2,000 infections.

The falling infections and the subsequent reopening and higher oil prices have led to better economic data. For example, the Ivey manufacturing and services PMIs have jumped. Similarly, the country created more than 419,000 jobs in July after adding more than 900K in June. Retail sales have also risen significantly.

Today, the USD/CAD pair reacted mildly to the tepid inflation data from the country. According to Statistics Canada, the headline consumer price index (CPI) increased 0.1% in July on a year-on-year basis. This was lower than the previous month’s increase of 0.7% and the 0.5% that analysts were expecting. Similarly, the core CPI, which excludes gasoline, rose by 0.7%, down from 1.1% in the previous month.

According to the bureau, price increased in five of the eight categories. The only lagging sectors were in air transportation, traveller accommodation, and gasoline prices. Multipurpose digital devices also recorded a 29.7% decline.

Canadian wholesale sales rebound

Meanwhile, wholesale sales continued rising in June. The sales increased by 18.5% to $62.1 billion after rising by 5.8% in the previous month. All sectors surveyed increased for the first time in seven years. Still, these sales were $2.7 billion below the February levels. The bureau said:

“June’s sales were largely consistent with other economic indicators, suggesting that the economy has started a widespread rebound. Monthly manufacturing sales increased 20.7% while employment rose by nearly one million and exports rose 17.1%.”

At the same time, the USD/CAD is falling after Justin Trudeau named Chrystia Freeland the next finance minister. The respected politician replaced Bill Morneau, who resigned on Monday.

USD/CAD technical outlook

The USD/CAD pair has been in a sharp downward trend after reaching a high of 1.4673 in March. Since then, the pair has dropped by almost 10%. On the daily chart, the price is below the 50-day and 100-day exponential moving averages while the Relative Strength Index (RSI) has been falling. Therefore, it seems like bears are in total control, which means that the pair is likely to continue falling as bears aim for the next support at 1.4600.