Canadian retail sales are expected to modestly improve to 0.5% in June from the month’s prior o.4%. May’s reading missed expectations and sparked a “loonie” bearish rally that would ultimately see it lose nearly 700 points to the dollar.
Fundamental Outlook
Canadian retail sales are expected to modestly improve to 0.5% in June from the month’s prior o.4%. May’s reading missed expectations and sparked a “loonie” bearish rally that would ultimately see it lose nearly 700 points to the dollar. An improvement in consumer consumption will be a positive sign for the Canadian economy given that it lost 55,200 jobs in July, and may lend Canadian dollar support. Technicals are calling for further loonie weakness, before giving way to a bullish rally. Another month of declining purchases would confirm this outlook. However, a better than expected print would coincide with our seasonality report which is calling for a short USDCAD trade.
Technical Outlook
We maintain that the drop that ended just below 1.0550 was probably a 4th wave correction. As such, expectations are for a new high (above 1.0726) to complete the advance from .9974. Longer term objectives are at 1.08. Look for a top and reversal near there. Coming under 1.0543 would require a reassessment of the situation.
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