- The USD/CAD rose today even after strong Canadian retail sales numbers.
- According to the statistics office, retail sales rose by 15.7% on a YoY basis and by 23.3% on a MoM basis.
- The pair is rising because of the overall stronger dollar and low crude oil prices.
The USD/CAD pair rose slightly today as traders reacted to the overall US dollar strength, lower crude oil price, and strong Canadian retail sales. The pair is trading at 1.3221, which is slightly higher than the intraday low of 1.3161.
Canada retail sales rally
The USD/CAD is rising even after strong retail sales from Canada. According to Statistics Canada, the headline retail sales rose by 23.7% in June to $53 billion. Like in the United Kingdom, retail sales in June were 1.3% higher than before coronavirus pandemic.
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Analysts polled by Reuters were expecting the sales to rise by 24.5%. On a MoM basis, the sales rose by 15.7%, which was higher than the 15.0% that analysts were expecting.
According to the statistics office, sales rose in all 13 subsectors, with motor vehicles, parts, and clothing and accessories being the best-performing. The bureau expects that the sales increased by 0.7% in July.
Sales in clothing and clothing accessories stores rose by 142% in June mostly because many states started to allow clothing stores to reopen. Furniture and home furnishings sales rose by 70.9% while gardening sales rose by 13%. Also, sales rose in all provinces.
Other countries also recorded better sales in June. In the United States, retail sales rose by 8.9% in June, while in the UK, the sales rose by 13.9% in the month. Earlier today, data from the UK showed that retail salesrose by 3.9% in July.
Overall dollar strength
The USD/CAD pair rose mostly because of the overall dollar strength. The US dollar index, a benchmark that measures the greenback’s performance, rose by 0.60% today. That is because the dollar rose by 1.1% against the Swedish krona, 0.85% against the British pound, 0.70% against the euro, and 0.55% against the Swiss franc.
The dollar weakness is mostly because the number of coronavirus cases has started to increase in most countries. In Europe, the cases have jumped in countries like Germany, France, and Spain. Elsewhere, cases have also risen in New Zealand and Australia.
Subsequently, the rising cases has affected growth in most countries. According to Markit, the services PMI in the Eurozone declined to 50.1 in August from the previous 54.7. In the same month, the manufacturing PMI dropped to 51.7 from the previous 51.8. Similarly, in Japan, the manufacturing PMI rose from 45.2 to 46.6, meaning that manufacturers are also struggling.
USD/CAD technical outlook
The daily chart shows that the USD/CAD pair has been in a strong downward trend since peaking at 1.4662. The pair is below the 50-day and 100-day exponential moving averages. It is also below the descending trend line that is shown in black. The price is also slightly below the 78.2% Fibonacci retracement level. Therefore, the pair is likely to continue falling as bears target the next support at 1.3000.