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Canadian Dollar cools heels despite Retail Sales beat

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  • Canadian Dollar sheds a fifth of a percent against Greenback.
  • Canada saw an upswing in core Retail Sales, but industrial prices cooled.
  • US PMIs beat the street, snubbing forecasts and ticking higher in June.

The Canadian Dollar (CAD) is struggling to overtake the US Dollar (USD) on Friday, buckling under the weight of a thin, five-day win streak against the Greenback after the US Purchasing Managers Index (PMI) firmly beat forecasts, bolstering the Greenback and leaving the CAD to compete for second place.

Canada saw a better-than-expected print in core Retail Sales in April, but floundering industrial and raw materials prices in May limited the Canadian Dollar's upside moves on Friday. US PMIs lurched higher in June, pushing the US Dollar higher across the board. The CAD is still broadly higher on the week, holding onto a fifth of a percent against the USD from Monday’s opening bids.

Daily digest market movers: Mixed Canadian data flubs broad beats from US

  • Canadian core Retail Sales surged 1.8% MoM in April, the highest MoM gain since July 2022. Markets had expected a print of 0.7% compared to the previous month’s revised -0.8%.
  • Canadian Raw Material Price Index fell a full 1.0% in May, a steeper decline than the expected -0.6% contraction and falling back from the previous 5.3% (revised from 5.5%).
  • Canadian Industrial Produce Prices came in flat in May, below the 0.5% forecast and clipping the previous month’s revised 1.4% as inflation continues to seep out of the Canadian economy at the industrial level.
  • US S&P Global Manufacturing PMIs broadly beat forecasts with the Manufacturing PMI printing at 51.7 versus the forecast decline to 51.0 from the previous 51.3.
  • US Services PMI also stepped higher, clipping into 55.1 compared to the median market forecast of 53.7 against the previous month’s 54.8.
  • Coming up next week, Bank of Canada (BoC) Governor Tiff Macklem will be making a public appearance on Monday; Tuesday will follow up with Canada’s Consumer Price Index (CPI) inflation alongside the BoC’s own CPI core print.

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.09% 0.13% 0.33% 0.11% 0.18% -0.00% 0.31%
EUR -0.09%   0.03% 0.26% 0.04% 0.11% -0.07% 0.22%
GBP -0.13% -0.03%   0.22% -0.01% 0.08% -0.10% 0.20%
JPY -0.33% -0.26% -0.22%   -0.23% -0.17% -0.34% -0.00%
CAD -0.11% -0.04% 0.01% 0.23%   0.05% -0.12% 0.20%
AUD -0.18% -0.11% -0.08% 0.17% -0.05%   -0.21% 0.12%
NZD 0.00% 0.07% 0.10% 0.34% 0.12% 0.21%   0.32%
CHF -0.31% -0.22% -0.20% 0.00% -0.20% -0.12% -0.32%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Technical analysis: Canadian Dollar gives mixed performance on Friday

The Canadian Dollar (USD) is trading tightly on Friday with gains and losses equally balanced. The CAD is up around a fifth of a percent against the Australian Dollar (AUD) and Japanese Yen (JPY), but struggling to limit losses against the US Dollar to one-fifth of one percent.

USD/CAD bumped higher on Friday, bouncing from a fresh weekly low of 1.3675 to briefly test back above the 1.3700 handle before running into intraday technical resistance at the 200-hour Exponential Moving Average (EMA) at 1.3715.

Daily candlesticks are on pace to chalk in a first green candle after soft declines for five straight trading days, rebounding from near-term support at the 50-day EMA near 1.3675. USD/CAD is mired in rough consolidation as traders grapple with a rough rising trendline, and long-term technical support continues to bolster bids as the 200-day EMA rises into 1.3600.

USD/CAD hourly chart

USD/CAD daily chart

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

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