Canadian Dollar news and market movers

• The Canadian Dollar loses ground against the US Dollar after the release of Canadian Retail Sales on Friday, which comes out lower-than-expected, printing 0.2% in May versus the 0.5% forecast from 1.0% in the previous month of April. 
• Retail Sales ex Autos also falls below expectations, printing a 0.0% change in May versus the 0.3% expected and the 1.2% rise registered in April.  
• Canadian New Housing Price Index data, released at the same time, registers a 0.1% rise in June, which was higher than the 0.0% forecast but the same as the 0.1% previous. 
• The lower-than-expected Retail Sales data weighs on the CAD (USD/CAD rises) because it indicates consumer spending is falling which will probably lead to lower inflation and lower interest rates – a negative for the Canadian Dollar. 
• The Greenback benefits from outflows from the Japanese Yen (JPY), according to a report by Reuters, cited by FXStreet Lead Analyst, Eren Sengezer. Traders are dropping the Yen ahead of next week’s Bank of Japan (BoJ) policy meeting amidst expectations the BoJ will maintain its Yield Curve Control (YCC) at current levels when some tightening had been expected previously amid higher inflation. 
• The US Dollar is further supported by lower-than-forecast US Initial Jobless Claims data for the week ending July 14. First-time applications for unemployment benefits in the US declined to 228,000, the Department of Labor announced on Thursday. This was well below the market expectation of 242,000. The strong jobs data suggests more persistent inflationary pressures ahead, which should keep interest rates higher for longer – a positive for the Buck. 

Canadian Dollar Technical Analysis: Treading water near critical support level

USD/CAD is probably in a long-term uptrend on the weekly chart, which began at the 2021 lows. Since October 2022, the exchange rate has been in a sideways consolidation within that uptrend. Given the old saying that ‘the trend is your friend’, however, the probabilities favor an eventual continuation higher and longs over shorts.

USD/CAD appears to have completed a large measured move price pattern that began forming at the March highs. This pattern resembles a 3-wave ABC correction, in which the first and third waves are of a similar length (labeled waves A and C on the chart below).