USD/CAD Analysis Ahead of Canadian Retail Sales Data
The USD/CAD the price retreated slightly on Tuesday as investors awaited the next few minutes from the FOMC and retail sales data from Canada. It moved back to a low of 1.3400, which was a few points below this week‘s high.
Canadian Retail Sales Data
The dollar at BODY the exchange rate fell slightly as the market waited for the next Canadian retail sales data. Economists polled by Reuters expect Canada’s retail sales to fall from 0.7% in August to -0.5% in September.
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Core sales, which exclude volatile food and energy prices, are expected to have fallen 0.7% to -0.6%. Retail sales in Canada have come under intense pressure in recent months due to soaring inflation. The most recent data showed that the country’s inflation jumped to 6.9% in October.
The Canadian Statistics Agency will also release the latest wholesale sales figures. Economists expect data to show sales fell 0.1% to 0.4%. Another important number will be the latest manufacturer sales and the new home price index.
These figures will provide clues on the next actions of the Bank of Canada (BoC). The bank has made a series of rate hikes since last year.
The main forex news for the USD/CAD price will be the next FOMC minutes scheduled for Wednesday. These minutes will provide more information about the meeting. Most analysts expect the minutes to show that most officials favored higher interest rates for longer.
Prior to the minutes, several Fed officials will speak and provide more information on rates. Loretta Mester, Esther George and James Bullard will speak on Tuesday. In statements last week, George and Mester hinted that they would support lower rate hikes.
The 4H chart shows that the USD/CAD price has been following a strong downtrend over the past few weeks. It broke through the important support level at 1.3500 earlier this month. This was an important level since it was the neckline of the head and shoulders pattern.
The pair formed a breakout and retest pattern returning to 1.3500. In price action analysis, this pattern is usually a continuation sign. Therefore, the pair is likely to continue lower as sellers target the next key support level at 1.3233.
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