The USDCAD broke a five day rut as the Canadian dollar declined through a combination of declining oil prices and solid retail sales data out of the US. WTI crude declined after yesterday’s inventories data from the Energy Information Administration (EIA). Crude has been trading near last session’s lows.
Retail sales out of the US were slightly encouraging, up a tenth of a percent from October at .7 percent. This was the largest November print in two years. “Strong retail sales is consistent with an earlier taper, and that goes back to that U.S. dollar-positive story,” said David Tulk, chef macro-strategist at TD Securities.
Less than encouraging words from the Bank of Canada (BoC) Governor Stephen Poloz, “we care more about downside risks than upside ones.” Clearly the central bank does not see promising things in the future. Poloz believes consumer prices will remain below the two percent inflation target for the next two years. Language out of the BoC continues to weigh on the loonie.
USDCAD bounced off well-defined price action at 1.0562, currently up .51 percent or 53 pips. Resistance in the near term will linger near the psychological 1.0650. Support will likely be defined at 1.0600, but 1.0700 could be retested with the US budget deal passes and the dollar stabilizes.