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USD/CAD analysis ahead of Canada retail sales data

By:
on Nov 22, 2022
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  • The USD/CAD pair pulled back ahead of Canada retail sales data.
  • With inflation soaring, analysts expect that sales slumped in September.
  • The Fed will publish minutes of the past meeting on Wednesday.

The USD/CAD price pulled back slightly on Tuesday as investors waited for the upcoming FOMC minutes and Canada’s retail sales data. It pulled back to a low of 1.3400, which was a few points below the highest level this week.

Canada retail sales data

The USD to CAD exchange rate pulled back slightly as the market waited for the upcoming Canadian retail sales data. Economists polled by Reuters expect that Canada’s retail sales declined from 0.7% in August to -0.5% in September. 

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Core sales, which exclude the volatile food and energy prices, are expected to have dropped from 0.7% to -0.6%. Canada’s retail sales have been under intense pressure in the past few months because of the soaring inflation. The most recent data showed that the country’s inflation jumped to 6.9% in October.

The Canadian statistics agency will also publish the latest wholesale sales numbers. Economists expect the data to show that sales rose from 0.1% to 0.4%. Another important number will be the latest manufacturing sales and new housing price index.

These numbers will provide hints about the next actions by the Bank of Canada (BoC). The bank has delivered a series of rate hikes since last year.

The main forex news for the USD/CAD price will be the upcoming FOMC minutes scheduled for Wednesday. These minutes will provide more information about the meeting. Most analysts expect the minutes to show that most officials were supportive of higher interest rates for longer.

Before the minutes, several Fed officials will talk and provide more information about rates. Loretta Mester, Esther George, and James Bullard will talk on Tuesday. In statements last week, George and Mester hinted that they will support lower rate hikes.

USD/CAD forecast

usd/cad
USD/CAD chart by TradingView

The 4H chart shows that the USD/CAD price has been in a strong bearish trend in the past few weeks. It crossed the important support level at 1.3500 earlier this month. This was an important level since it was the neckline of the head and shoulders pattern.

The pair has formed a break and retest pattern by moving back to 1.3500. In price action analysis, this pattern is usually a sign of continuation. Therefore, the pair will likely continue falling as sellers target the next key support level at 1.3233.