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USD/CAD remains well supported just above 200DMA at 1.2500, loonie shrugs off downbeat retail sales, house price data

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FXStreet in Market News 12 198017
January 21, 2022 22:09

content provided with permission by FXStreet

  • USD/CAD remains well supported to the north of its 200DMA at 1.2500 as risk-off flows limit loonie upside.
  • Weak Canadian Retail Sales and New House Price Index data has not moved the loonie.
  • Markets are focused on next week’s Fed and BoC meetings.

USD/CAD has remained well supported to the north of its 200-day moving average at bang on 1.2500 as risk-off flows in global equities and profit-taking in crude oil limits demand for risk/commodity-sensitive currencies like the loonie. At current levels near 1.2520, the pair is trading with very modest gains of about 0.1% on the day, with the looie holding up better on the session in comparison to its antipodean dollar peers.

But the pair continues to trade well within the 1.2450-1.2550 range that has prevailed over the past six or so sessions. The US dollar’s broad recovery this week has prevented the Canadian dollar from taking advantage of higher crude oil prices and heightened expectations for imminent policy tightening from the BoC.

The loonie was not reactive to the latest Canadian Retail Sales or New House Price Index figures. The former showed sales growing at a slower than expected 0.7% MoM pace in November, while Statistic Canada’s flash estimate for December showed a 2.1% MoM drop, likely driven by surging Omicron infections last month. The New House Price Index, meanwhile, also grew at a more sluggish than expected MoM pace of 0.2% versus forecasts for 1.0%.

Ahead, there is little else on Friday’s calendar to get traders excited, though the release of the US December Leading Index at 1500GMT and a speech from US Treasury Secretary Janet Yellen at 1630GMT might be worth keeping an eye on. Next week, the Fed and BoC policy announcements on Wednesday will be the key events for USD/CAD traders to watch, though US flash PMIs (on Monday), advance Q4 GDP estimate (on Thursday) and Core PCE inflation on Friday will all also be worth watching.