Retail sales should not derail CAD recovery
We expect commodity currencies to remain in recovery mode this week, with further dovish commentary from the Fed putting renewed pressure on the US 10y rates. In Canada, consensus forecast expects a strong 0.6% m/m bounce in July retail sales today, but our economist is calling for a more moderate 0.3% m/m gain. Barring a positive surprise in the US data, Canadian retail sales should be consistent with some further CAD gains as short positioning (the largest in the G10 after JPY according to BNP Paribas Positioning Analysis) scales back further. Key technical support for USDCAD is from the May-June low of 1.0140. A break of that level would signal a potential move to 1.0052 low seen in May.
Read the full report: FX Daily
BNP Paribas