Canadian dollar rises sharply in early US session on the back of much stronger than expected retail sales from Canada. Headline sales rose 1.0% mom in June versus expectation of a -0.1% fall. Ex-auto sales also managed to rise 1.0% mom, much better than consensus of 0.1%. Also, crude oil firms up in early US session and is set to extend recent rally, which provides additional support to the Loonie. One thing to note is that Canadian dollar has regained some strength broadly since last week following the sharp rally in crude oil. For example, the EUR/CAD's recovery should have completed at 1.5695 after hitting 55 days EMA and the development dampens the case that choppy fall from 1.7499 has completed at 1.5183 in July. Instead, we're looking at the prospect of a new low below 1.5183 as the down trend resumes.

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Released earlier today, Eurozone industrial orders also posted stronger than expected gain of 3.1% mom in June. Year-over-year contraction also moderated more than expected to -25.1%. EUR/USD was lifted mildly against dollar but remains in range in general. Commodity currencies are taking the lead today with Aussie extending last week's rebound too. On the other hand, European majors treads water as respective commodity crosses are generally soft.

USD/CAD Mid-Day Outlook

USD/CAD's fall continues as expected and reaches as low as 1.0727 so far in early US session. Intraday bias remains on the downside for a test on 1.0631 low first. and break will bring resumption of whole decline from 1.1723 to next target of 61.8% projection of 1.1723 to 1.0631 from 1.1123 at 1.0448. On the upside, above 1.0826 minor resistance will turn intraday outlook neutral first. But short term risk will remain on the downside as long as 1.1123 resistance holds.

In the bigger picture, recent development suggests that medium term decline from 1.3063 is still in progress. Nevertheless, there is no change in the view that it's a correction to the five wave rally from 0.9056. Also, such correction is expected to conclude inside 1.0297/0819 support zone. Hence, while another low below 1.0631 might be seen, focus will remain on reversal signal on the next fall. On the upside, above 1.1123 will now be an important signal that USD/CAD has bottomed out and break of 1.1723 resistance will confirm that whole fall from 1.3063 has completed.

USD/CAD

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
09:00EUREurozone Industrial New Orders M/M Jun3.10%1.80%-0.50%-0.50%
09:00EUREurozone Industrial New Orders Y/Y Jun-25.10%-28.30%-30.30%-30.30%
12:30CADRetail Sales M/M Jun1.00%-0.10%1.20% 
12:30CADRetail Sales Less Autos M/M Jun1.00%0.10%0.70%