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USD/CAD discovers buying interest near 1.3430 after Canada’s Retail Sales excluding automobiles remained stronger.
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Consumer spending for automobiles remained weak as households avoided higher installment obligations.
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The US Dollar struggles to find a direction as investors remain mixed about the Fed’s interest rate peak.
The USD/CAD pair found interim support near 1.3430 after Statistics Canada reported mixed retail sales report for July. Consumer spending expanded at a slower pace of 0.3% versus expectations of 0.4%. In June, retail sales rose a nominal 0.1%.
Retail sales excluding automobiles expanded a solid full one percent, doubling expectations of 0.5%. Economic data contracted by 0.7% in June. A review of retail sales reports showed that demand for automobiles was weak. Households have deferred demand for automobiles to avoid high interest obligations.
The Canadian dollar remains strong as oil prices prepare for a new rally above immediate resistance at $91.00. Oil prices are expected to rise further due to deepening supply concerns and expectations of an end to the global rate-hike cycle. It is worth noting that Canada is an oil exporter to the United States and higher oil prices support the Canadian dollar.
This week, Canadian inflation data for August was mixed. The headline Consumer Price Index (CPI) expanded at a higher pace of 0.4% versus expectations of 0.2% as energy prices rose. The Bank of Canada (BoC) considers core inflation for the monetary policy framework, therefore, the impact of the recovery in gasoline prices will be limited.
Meanwhile, the US dollar is struggling to find a direction as investors are mixed on whether the Federal Reserve (Fed) will keep interest rates unchanged for the rest of the year or raise them once more. According to the CME FedWatch tool, traders see a 71% chance that interest rates will remain steady at 5.25%-5.50% at the November monetary policy meeting.
USD/CAD
