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November 16, 2022

USDCAD cracks 1.3300

- A tranche of economic data from the United States bolstered the US Dollar and capped the USDCAD fall.

- Canada’s Consumer Price Index for October was unchanged, undermining the Loonie.

- USDCAD Price Analysis: The head-and-shoulders pattern remain in place, but sellers need to crack the 100-day EMA.

The USD/CAD is still subdued after United States economic data showed consumers resilience, while Canada’s inflation appeared to pause following a report. Also, a risk-off impulse, spurred by an upbeat US sales report, capped the USDCAD fall. At the time of writing, the USDCAD is trading at 1.3304, above its opening price by 0.21%.

US Retail Sales showed consumer spending increased

US equity futures point to a lower open. The US Department of Commerce (DoC) reported that October Retail Sales in the US rose the most in eight months, with readings hitting 1.3% MoM vs. 1% expected by analysts. Delving into the report, Retail Sales in the control group, used to calculate Gross Domestic Product (GDP), expanded by 0.7% MoM vs. 0.3% consensus.

Even though Federal Reserve officials have expressed their desire to moderate interest rate hikes, US consumers resilience, would complicate their work. Nevertheless it should be remembered the Fed’s latest monetary policy statement where they said that “the Committee will take into account the cumulative tightening of monetary policy.” So traders better be aware of Fed policymakers reaction to the Retail Sales report.

Further US data revealed during the day saw Industrial Production (IP) plunging from September’s 0.1% to -0.1% MoM, below estimates of a 0.2% increase. According to the report, “Capacity utilization decreased 0.2 percentage points in October to 79.9%, a rate that is 0.3 percentage points above its long-run (1972–2021) average.”

Canada’s Consumer Price Index was unchanged, weighing on the Loonie

On the Canadian side, the Canadian Consumer Price Index (CPI) held at 6.9% YoY in October, blamed mainly on high gasoline prices and the Bank of Canada (BoC) interest rate hikes. In the same report, the core CPI number, which excludes volatile items like food and energy, rose by 5.3% YoY. Analyst at CIBC commented that  Canada’s inflation rate got fueled up in October, but there was just a hint of better news in the underlying detail, as prices outside food and energy saw a tamer seasonally adjusted gain.

Given the amount of data revealed, the USDCAD remained almost unchanged, at around its opening price. However, it should be noted that the USDCAD bias is neutral-to-downwards but faces solid support at the 100-day Exponential Moving Average (EMA) at 1.3238.

USDCAD Price Analysis: Technical outlook

The head-and-shoulders chart pattern remains in place as long as the USDCAD exchange rates continue to trade below the neckline, which is around 1.3500. The Relative Strength Index (RSI) shows that buyers are beginning to gather momentum as it stalled its fall and its slope turned upwards. Nevertheless, until it crosses the 50-midline, sellers remain in charge. USDCAD key support levels lie a the 100-day EMA, followed by the 1.3200 psychological level. Once cleared, it would exacerbate a fall toward the head-and-shoulders target at around 1.3030. Otherwise, if USDCAD buyers regain control, a re-teste of 1.3400 is on the cards.

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