USD/CAD Exchange Rate Prediction – The Loonie Eases Following Weak Retail SalesStrong PMI data buoys US yields lifting the greenback
The USD/CAD nearly formed a doji day, moving lower initially but bouncing near support as the dollar gained traction. Strong U.S. Treasury yields following the better than expected manufacturing data helped buoy the greenback. Canadian retail sales fell sharply also taking some of the wind out of the sails of the loonie. IHS Markit reported its flash U.S. manufacturing PMI rose to a reading of 62.6 in June, more than the 61.5 expected.
The USD/CAD rebounded after initially moving lower, bouncing at support which is seen near the 10-day moving average at 1.2262. Resistance is seen near the former breakout trend line near 1,2364. Additional resistance is seen near the 100-day moving average at 1.2410. The 10-day moving average crossed above the 50-day moving average, which means that a short-term uptrend is now in place. Short-term momentum is negative. The fast stochastic generated a crossover sell but the lower trajectory is receding, reflecting consolidation. Medium-term momentum is positive but decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.
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Canadian Retail Sales Drop
The combination of strong U.S. data and weak Canadian data conspired to weigh on loonie. Canadian retail sales fell in April due to nationwide lockdown. Retail sales decreased 5.7% in April to 54.77 billion Canadian dollars, according to Statistics Canada. Expectations were for April retail sales to fall 5.1% after surging 3.6% in March and 5.8% in February. Statistics Canada also reported that Retail Sales on a volume terms declined 5.6% in April.