USDCAD at 18-month highs as mixed NA data released

Summary:

• US GDP and core durable goods orders miss

• CAD retail sales also disappoints but GDP beats

• USDCAD trading close to 18-month highs around 1.3550

The main data points of the afternoon have been released ahead of the US session with data from both the US and Canada providing further insight into their respective economies. First off the US, where we got the final GDP reading for the third quarter. A print of 3.4% in annualised terms is strong compared to many of its peers, but against consensus forecasts for a 3.5% rise in line with the prior this represent a mild disappointment. At the same time we also had the most recent growth figures from Canada where there was a positive surprise with GDP M/M bouncing back from a -0.1% print last time to come in above the 0.2% expected at 0.3%.    

After a prolonged slump there’s been a recent pick-up in Canadian GDP which has been supported by a recovery in the level of oil extraction. Source: XTB Macrobond

While the growth figures were Canada were good, they are lagging and relate to the month of October so aren’t too pressing for the present. Consumer spending is seen as a key gauge of economic activity and on this front the retail sales release was somewhat weak. The headline figure M/M showed a rise of 0.3% when 0.4% was expected, with the prior revised down by 10 basis points to 0.1%. The core number was equally soft with a print of 0.0%, below both the median forecast of 0.2% and the prior of 0.1%. The data miss for the core means its now 3 consecutive readings for this indicator that have come in below consensus forecast.

Canadian retail sales continue to flash warning signs, with both the headline and core reading disappointing in the latest release. Source: XTB Macrobond

Finally, returning our attention to the US, there was more negative news with durable goods orders for November 0.8% M/M against calls for a rise of 1.6%. The prior reading was revised higher to now stand at -4.3% from -4.4% previously, but even though this shows the metric bounced back last month, it is still weaker than expected. The core figures confirmed the weakness with an unexpected drop to -0.3% from 0.2% prior (revised up from 0.1%) against a median expectation of 0.3%.   

Both the Durable goods orders number came in on the soft side in the latest update, indicating a drop in consumer spending. Source: XTB Macrobond

The USDCAD pair has moved up to its highest level since June 2017 today with the market briefly trading above 1.3550. However, the data has seen a bit of a pullback in the market and with today the 7th day in a row that price has moved higher there is some suggestion that a pullback could lie ahead. Price has been in a nice clean uptrend from 1.2780 in the past few months, with little seen by the way of any pullbacks.

USDCAD has reached an 18-month high today and is currently in the green for a 7th consecutive day. However, the data on the whole isn’t really supportive of this rise and we could be set for a pullback lower. Source: xStation