USD/CAD Price Forecast: Trades firmly near 1.3800 ahead of US Retail Sales data
- USD/CAD clings to gains around 1.3800 as hot US PPI strengthens the US Dollar.
- US Retail Sales are seen higher at 0.5% in July.
- BoC officials see room for further interest rate cuts.
The USD/CAD pair holds onto Thursday’s gains around 1.3800 during the Asian trading session on Friday. The Loonie pair trades firmly as the US Dollar (USD) has strengthened, following the release of the hotter-than-projected United States (US) Producer Price Index (PPI) data for July.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to Thursday’s gains around 98.00.
The PPI report showed that both headline and core producer inflation rose by 0.9% on month, faster than expectations of 0.2%. Market experts believe that business owners are also passing on the impact of tariffs to consumers rather than absorbing into profits. However, traders are still confident that the Federal Reserve (Fed) will reduce interest rates in the September meeting due to cooling labor market conditions.
In Friday’s session, investors will focus on the US Retail Sales data for July, which will be published at 12:30 GMT. Economists expect Retail Sales to have grown by 0.5% on month, slower than the prior reading of 0.6%.
Meanwhile, the Canadian Dollar (CAD) trades cautiously as Bank of Canada (BoC) members discussed, in the July policy meeting, whether interest rates are low enough to weather the impact of tariffs imposed by the US, BoC Summary of Deliberations showed on Wednesday. In the meeting, the BoC held interest rates steady at 2.75%.
USD/CAD strives to extend its upside move above the 100-day Moving Average (MA), which trades around 1.3822. The 14-day Relative Strength Index (RSI) rises to near 60.00. A fresh bullish momentum would emerge if the RSI breaks above that level.
Going forward, an upside move by the pair above the August 1 high of 1.3880 would open the door towards the May 15 high of 1.4000, followed by the April 9 low of 1.4075.
On the contrary, the asset could slide towards the psychological level of 1.3500 and the September 25 low of 1.3420 if it breaks below the June 16 low of 1.3540.
USD/CAD daily chart
