The two-day decline in the Canadian dollar appears to have come to an end as the USD/CAD pair has recovered from the session low of 1.3377 to trade with marginal gains around 1.3432 levels.
Oil drop overshadows strong Canadian retail sales data
The official data released in Canada showed consumer spending as represented by the retail sales number picked up in September on demand for new cars. Auto purchases rose for the first time in three months.
Retail sales climbed 0.6% in September, matching estimates and higher than the previous month’s print of 0.1%. Core retail sales, excluding automobiles, were unchanged in September, after a 0.2% gain in the preceding month.
The month-on-month uptick in the retail sales failed to boost the demand for the Canadian dollar… as oil prices dropped on both sides of the Atlantic on reports that Iran and Iraq are unlikely to commit 100% in the OPEC output deal.
Moreover, the USD/CAD pair remains at the mercy of the oil price action and the Trump Trade at least for another week.
Technicals – Bulls eye daily close above 10-DMA
Chart source: www.Netdania.com
- Despite the two-day sell-off following multiple failures near 1.3560-1.3580 levels, the rebound from the channel support followed by a move back inside the rising channel suggests the bulls are gathering steam and could make their presence felt in a strong way if the prices end the day above the 10-DMA seen today at 1.3469.
- A daily close above 10-DMA would open doors for a re-test of 1.3560-1.3580.
- On the lower side, only a daily close back inside the sideways channel would add credence to the multiple failures around 1.3560-1.3580 and would shift risk in favor of a fresh sell-off to 1.3282 (100-DMA).