USD/CAD Exchange Rate Prediction – The Dollar Finally Rebounds

The dollar rebounded against Loonie on Tuesday amidst a broad dollar rally. Stronger than expected U.S. retail sales in conjunction with higher import prices buoy U.S. Treasury yields making the greenback more attractive. Despite higher prices, core U.S. Retail Sales advanced which shows that the consumer is willing to spend even with price increases at the consumer level.

Technical analysis

On Tuesday, the dollar moved higher, recapturing resistance, which is now short-term support near the 50-day moving average, 1.2532. Resistance is seen near the November highs at 1.2605. The exchange rate appears to be forming a bull flag pattern which is a pause that refreshes higher. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index is generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Gasoline Sales Rose 47% Year over Year

Retail sales, increased 1.7% for October, compared with 0.8% in September. Core retail sales which exclude autos, sales also increased 1.7%. The Expectations were for 1.5% for the headline print and 1% for the core sales gain. Online shopping posted the biggest relative gain for the month, rising 4% and good for a 10.2% gain from a year ago. Soaring prices at the pump pushed gasoline sales up 3.9% in October. Year over year, sales increases at stations have surged 46.8%. Import prices rose 1.2% in October, ahead of the 1% Dow Jones estimate and the fastest increase since May. That was well ahead of the 0.4% increase in September.