Canadian Data Continues to Disappoint

The headline retail sales number (MoM) was -1.2% vs expectations of +0.5%

Canadian Retail Sales were released earlier today, and the results were disappointing.  Although the data was for October, the data still matters.   The headline retail sales number (MoM) was -1.2% vs expectations of +0.5% and -0.1% in September.  This is the lowest headline number since November 2018.  Core Retail Sales (MoM), which excludes autos, was -0.5%, vs +0.1% expected and a revised -0.1% data print from September.

The retail sales data continues a string of disappointing data from Canada.  The Employment Change from November was -71,200 vs an expectation of 10,000.  The Unemployment Rate also rose to 5.9% from 5.5% in October.  In addition, manufacturing sales were -0.7% for October vs 0% expected.  The Bank of Canada left rates unchanged at 1.75% at its December 4th meeting, however this new data will need to be considered when they meet again on January 22, 2020. 

As we have written about previously, USD/CAD has been trading in a multi-year, symmetrical triangle and has been nearing the apex.

Source: Tradingview, FOREX.com

In October, price broke the rising, lower trendline of the triangle near 1.3050, only to trade back towards the 200 Day Moving Average near 1.3270, and squeeze as high as 1.3327, only to turn lower and back below the rising trendline.  With today’s poor retail sales data, price has put in a long bullish white candle and price is currently trying to break back above the rising trendline at 1.3180. 

Source: Tradingview, FOREX.com

On a 240-minute timeframe, price moved higher off horizontal support near 1.3100  to the 38.2% Fibonacci retracement level from the December 3rd high to the December 18th low near 1.3185 and stalled there.  Above the 38.2% retracement level is horizontal resistance near 1.3220.  The next resistance level is the December 3rd high at 1.3320.  Support is at the previous low near 1.3100, then a zone or zone of support between 1.3000 and 1.3140. 

Source: Tradingview, FOREX.com

Although we are focusing on the shorted time frame levels, the next longer-term move will be on a break of either 1.3000 or 1.3500.  We may have to wait until the next Bank of Canada rate decision meeting on January 22, 2020 to get it though.


Related Articles

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.