The Canadian Dollar has preserved its strength on the day despite the fall in Canadian retail sales for December 2020.
Data from Statistics Canada showed that retail sales in Canada dropped by 3.4% in what was the largest fall since the drop that was seen in April following the start of the coronavirus pandemic. This was a sharp decline from the 1.8% increase seen previously (an upward revision) and the drop of 2.5% that was the market consensus number.
9 out of 11 subsectors saw a drop in retail business activity. Core retail sales also witnessed a slump, falling 4.1% versus the previous number of 2.9% and the consensus figure of 2.4%.
Despite the disappointing retail sales figure, the Canadian Dollar managed to hold on to gains achieved against the US Dollar. These gains arose from an intraday bounce in crude oil prices and the prevailing weakness on the greenback. This is even as US bond yields continue to rise in a clear case of the greenback simply unable to catch a break from rising risky sentiment.
The USDCAD is trading at 1.26174, or 0.45% lower on the day as it steadily marches towards the 1.26000 psychological support.
Technical Levels to Watch
Friday’s move to the south has put the support at 1.26219 at risk. A breakdown of this area enables the USD/CAD to form lower lows and continues the downtrend that has lasted for nearly a year. A further decline below 1.26219 brings 1.25323 into the picture, but the price must overcome the psychological support at 1.26000 first.
On the other hand, an upside on the USD/CAD would be more of a retracement pullback that allows bears to sell on rallies. Such a retracement rally could come off the current support and may target 1.26647 and 1.27315, with 1.27831 and 1.28342 also lining up as potential rally points along the way.
USD/CAD Daily Chart