The following is Canada Retail Sales and Canada CPI data release and their effect on USDCAD following BoC meeting on Wednesday. See what the data means for the country’s economy.
21 October, AtoZForex – Bank of Canada (BoC) has concluded during Wednesday’s meeting that Canada’s economy is holding up well following 1.6% contraction in Q2 2016 and the near term outlook for 2017 still appears to be strong. This, however, came amid lower BoC forecasts.
Nonetheless, the BoC’s Monetary Policy Report and Rate Statement did not affect the CAD much. Instead, USDCAD remained to trade based on technical developments and using BoC meeting as an excuse market participants forced the pair lower to the expected 1.3022 level based on our weekly USDCAD analysis. From where Loonie rebounded and reached our target at 1.3110.
Canada CPI data release
Statistics Canada reported that:
The Consumer Price Index (CPI) rose 1.3% on a year-over-year basis in September, following a 1.1% gain in August. Excluding gasoline, the CPI was up 1.5% year over year in September, after posting a 1.7% increase in August.
The Bank of Canada’s core index increased 1.8% year over year in September, matching the gain in August.
Canada Retail Sales data release
As the Statistics Canada reports:
Retail sales edged down 0.1% to $44.0 billion in August. Lower sales at motor vehicle and parts dealers, and general merchandise stores were the main contributors to the decline. Excluding these two subsectors, retail sales were up 0.2%.
Sales were down in 7 of 11 subsectors, representing 57% of retail trade. After removing the effects of price changes, retail sales in volume terms decreased 0.3%.
While Canada CPI data was published as expected, Retail Sales release came far lower than expected. Relatively low CPI data and flat Retail sales put BoC’s optimism for strong Q4 2016 growth in doubt, in turn weighing on the CAD.
Technical USDCAD outlook
Meanwhile, from technical perspective, continuing from Wednesday USDCAD remains trading to the upside as the underlying bullish trend prevails. Following the Canada CPI & Retail Sales data release, the pair jumped to Fibonacci 0% retracement area at 1.33 level and posting a new high.
This confirms our expectations for further bullish gains. However, new orders on Friday are not recommended and we will look at USDCAD technical analysis post CPI data during the weekend.
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