The Canadian Dollar (CAD) saw a slight recovery on Friday, gaining ground against most major currency peers, including the US Dollar (USD). Despite missing forecasts in Canadian Manufacturing Sales and Wholesale figures, the CAD managed to claw back a tenth of a percent against the USD. However, the focus shifted later in the trading day as the University of Michigan’s Consumer Sentiment Index unexpectedly declined to a six-month low, impacting market sentiment as the week came to a close.
Manufacturing Sales in Canada rebounded by 1.1% in April, slightly missing the expected 1.2%. Wholesale Sales also saw a milder recovery than anticipated, coming in at 2.4% against a forecast of 2.8%. The UoM Consumer Sentiment Index fell to 65.6 in June, lower than the expected 72.0, marking the worst print in six months. Additionally, 5-year Consumer Inflation Expectations rose to 3.1% from the previous 3.0%, indicating increased future inflation expectations amid the ongoing Covid-19 pandemic.
Looking ahead, Canadian data is expected to take a back seat next week, with mid-tier releases being the focus. The US Retail Sales print on Tuesday is anticipated to be a key event to watch in the upcoming week. The CAD saw the most strength against the British Pound among the listed major currencies, with a mixed performance against other currencies on Friday.
The technical analysis showed choppy trading for the Canadian Dollar, with the CAD trading higher against most major currencies on Friday. Despite a slight decline against the Swiss Franc, the CAD rose against the Pound Sterling, Euro, and New Zealand Dollar. The USD/CAD pair traded above the 200-hour Exponential Moving Average (EMA) but remained volatile, with consolidation weighing on daily candlesticks. Near-term momentum favored sellers, with the pair likely to move towards the 50-day EMA unless buying pressure pushes it back above recent peak bids.
Factors influencing the Canadian Dollar include interest rates set by the Bank of Canada, the price of Oil, the health of the economy, inflation, and the Trade Balance. The BoC’s influence on interest rates, Oil prices, and economic indicators play a significant role in determining the value of the CAD. Additionally, market sentiment, such as risk-on or risk-off environments, and macroeconomic data releases also impact the Canadian Dollar, making it a currency to watch in the global market.
