Canadian Dollar Dips Ahead Of Retail Sales
2022.10.21 13:20
The Canadian dollar is in negative territory today, as the is higher against the major currencies. In the European session, is trading at 1.3827, up 0.45%.
Canada retail sales expected to improve
Canada releases for August later today. The July data was weak, with retail sales at -2.5% and at -3.1%. The consensus for August stands at 0.4% for the headline reading and 0.2% for core retail sales. The July release was the first decline for both indicators in seven months, and another decline would raise concerns about the strength of consumer spending, a key driver of economic activity.
remains high and is still the Bank of Canada’s number one priority. Headline inflation ticked lower to 6.9% in September, down from 7.0% in August. Still, the reading was higher than the consensus of 6.8%. remains even more stubborn and rose unexpectedly to 6.0%, up from 5.8% and above the forecast of 5.6%.
The inflation report takes on added significance as the Bank of Canada meets next week. Policy makers are virtually certain to raise rates, but by how much? The rise in core inflation was not a surprise for the central bank, as most BoC core inflation indicators are around 6% and have not shown any signs of peaking. The takeaway from this week’s inflation data bolsters the case for a 75 basis point hike, with inflation remaining stubbornly high.
The Fed has given no signals that it plans to ease up on rate hikes anytime soon, and this hawkish stance was reaffirmed by Philadelphia Federal Reserve President Patrick Harker on Thursday. Harker said that higher interest rates had failed to curb inflation, and the Fed would have to continue raising rates, which he said will be “well above” 4% by the end of the year. Currently, the benchmark is at 3.25%, with the Fed holding its next meeting on November 2nd.
USD/CAD Technical
- 1.3854 and 1.4005 are the next resistance lines
- There is support at 1.3731 and 1.3580
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