Canadian CPI is out at 13.30 gmt+1 and we get another clue as to whether the 8 month run from 0.7% to 2.4% is going to start falling back.
The market is looking for a fall to 2.2% from 2.4% y/y in the headline but a slight rise in the core to 1.9% from 1.8%
Another jump higher in inflation might have the market questioning the “temporary” calls from the BOC more so than they have previously.
June retail sales are also on the CAD docket so there’s a decent round of data for the loonie traders.
Monthly sales are expected in ta 0.3% from 0.7% last month and 0.5% from 0.1% for sales ex autos.
Higher inflation and better retail sales will likely see the USD/CAD fall. Now we’re back in the middle of the 1.09 – 1.10 range look for the big numbers to act as the first lines of support and resistance. 1.0900 is likely to be the weaker of the two and 1.0986 is the first focal point before we try 1.10
USD/CAD Daily chart 22 08 2014
Once again the Yellen factor needs to be thrown into the mixing bowl and again this might provide a good opportunity. Fancy a dovish Yellen, then a big fall in inflation and retail sales may give you a higher USD/CAD price to sell into.
