The Canadian Retail Sales figure showed a drop in September by 0.1%, which was lower than the previous figure that was revised to a rise of 0.1%. However, it was better than the forecast of – 0.3%.
The report did not provide significant volatility on the USDCAD as a deeper dive into the data showed that consumer spending was still weak on many fronts. Household debt was up, and so was the cost of servicing such debts. These are expected to cap retail sales increases in the near future.
The USDCAD is presents an intriguing setup on the daily chart. Recent price action is contained within an up channel, but price is also capped by a horizontal resistance at 1.33487 (Aug 7, September 4 and October 10 highs).
We also see two long-term descending trendlines, the longer one of which connects the highs of Dec 31, 2018 and May 31, 2019). The shorter trendline connects the highs of June 18, September 3 and October 10.
The confluence point above the horizontal resistance at 1.33487 and within the channel/trendlines marks the critical area where price would either breakout, or break below the identified price levels.
A break of 1.33487 will take the USDCAD towards the 1.34308 resistance area (December 7 2018 and June 18 2019 highs). Above this price level, 1.35231 comes into play.
A drop below the channel as well as the shorter trendline targets 1.3203 (Aug 9 and Nov 19 lows). The June 19 and Sept 10 lows at 1.31501 represent the next support level in line if 1.3203 fails to hold firm.More content