The Canadian dollar has just broken out of its post-Fed range, where the currency pair traded for 27 consecutive working days. The impetus behind such a move isn’t as clean cut as one would like, but comes from general dollar weakness over the last two days.
Gold is higher at 1840.00, rising another $10 in the last 20 minutes, while WTI has risen to test the $42 mark after sitting just shy of $41 this morning. Even the euro, which struggled to hold onto yesterday’s gains despite the recovery fund being rubber stamped overnight, is now back to sitting roughly flat on the day.
The current market pricing doesn’t necessarily suggest a risk-on nor risk-off move by the usual indicators, but instead a broad rout in the US dollar as the southern states remain embattled with the domestic outbreak while the rest of the world recovers.
The Canadian dollar extended its early morning gains despite retail sales data for May undershooting expectations by 1.3% with a reading of 18.7% MoM. In volume terms, retail sales rose by 17.8% with new car dealers the largest upside contributor, rising 9.97%. The supermarkets category, which saw a massive uptick during the virus outbreak due to stockpiling effects. Statistics Canada’s flash estimate for June saw retail sales rise by 24.5%. The consumption data will prove pivotal ahead of tomorrows CPI release as the statistics agency and Bank of Canada are paying much more attention to the shifting consumer tastes in an adjusted CPI basket. This is expected to show a truer measure of inflation for consumers.
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Author: Simon Harvey, FX Market Analyst