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Today’s Trading Edge: USD/CAD loonie rallies as stronger retail sales raise expectations for a July hike

Posted by WorldWideMarkets . on Jun 22, 2017 6:17:02 PM

WWM USDCAD 2017.jpg

On Thursday, Statistics Canada showed retail sales beat the analyst forecast of 0.3% and rose 0.8% to $48.6 billion in April. Sales were up in 9 of 11 subsectors, representing 71% of total retail trade. Excluding sales at motor vehicle and parts dealers, retail sales climbed 1.5%.

Expectations for a Bank of Canada rate hike as early as next month rose to 34% from 25% before the retail sales report.  The market is widely pricing in a rate hike to occur in 2017. 

Price action on the USD/CAD daily chart shows the tentative drop below the 200-day SMA.  To the downside, initial support may come from 1.3070 level.  Major support may come from the 1.2871 region, it is around that area that price could form a bullish butterfly pattern. If we see a return of the bullish stance, key resistance will come from the 1.3300 to 1.3350 zone.  If we see a major greenback recovery, major resistance will come from the 1.3500 level

The trade: Sell USD/CAD at 1.3275 with a stop loss at 1.3325 and take profit at 1.3125.  The risk/reward ratio is 1:3

Topics: Bank of Canada, USDCAD


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