{"id":440738,"date":"2026-10-23T21:40:08","date_gmt":"2026-10-23T14:40:08","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/usdcad-falls-below-1-4000-as-stronger-canadian-spending-keeps-sellers-in-control-440738\/"},"modified":"2026-10-23T21:40:08","modified_gmt":"2026-10-23T14:40:08","slug":"usdcad-falls-below-1-4000-as-stronger-canadian-spending-keeps-sellers-in-control","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/usdcad-falls-below-1-4000-as-stronger-canadian-spending-keeps-sellers-in-control-440738\/","title":{"rendered":"USDCAD falls below 1.4000 as stronger Canadian spending keeps sellers in control"},"content":{"rendered":"
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Canadian consumers stepped up their spending in August. Statistics Canada reported retail sales increased 1.2% to $74.6 billion, with gains across all nine subsectors. The encouraging detail is that sales volumes also increased 1.2%. There was real buying behind the headline increase.<\/p>\n

The strength extended beyond autos and gasoline. Core sales rose 1.1%, reversing July\u2019s 0.7% decline, with food, general merchandise, and health and personal care retailers contributing. Gasoline was the exception to the volume story: receipts increased 1.7%, but volumes fell 0.5%, indicating higher prices drove that gain.<\/p>\n

Quick analysis:<\/p>\n

Today\u2019s report gives the Canadian economy some better news, but the broader data are still telling a mixed story. The increase in retail volumes is encouraging after real gross domestic product was unchanged in July. It points to a stronger contribution from goods consumption in August, although retail spending is only one part of overall growth.<\/p>\n

The employment picture is the concern. Canada lost 68,000 jobs in September, including 35,000 full-time positions, while unemployment increased to 6.5% from 6.4%. That was the second consecutive monthly employment decline. Consumers have continued spending, but sustained job losses would make that strength harder to maintain. Remember, the August retail figures predate September\u2019s employment decline, while the September spending estimate is still preliminary.<\/p>\n

Inflation also needs a look beneath the headline. September\u2019s Consumer Price Index rose 3.1% year over year, up from 3.0%, largely because of gasoline. Excluding gasoline, inflation slowed to 2.2% from 2.4%. Underlying measures eased as well: CPI-trim slipped to 1.8% from 1.9%, while CPI-median fell to 1.9% from 2.0%. Those measures help filter out unusually large price changes. The message is that higher energy costs are lifting headline inflation, while broader price pressures have moderated.<\/p>\n

For the Bank of Canada, there are competing forces: resilient spending, weaker employment, and softer underlying inflation despite the energy-driven headline increase. The Bank held its policy rate at 2.25% in September, with its next decision and updated forecasts due October 28. My take is that today\u2019s retail figures could reduce the urgency to ease, but they do not erase the employment concerns. The normal currency bias from stronger spending would support the Canadian dollar and pressure USDCAD lower, although the mixed economic backdrop makes a sustained move less clear-cut.<\/p>\n

What are the price action and technicals telling traders?<\/p>\n<\/p>\n

Stronger Canadian spending would normally support the Canadian dollar and push USDCAD lower. That is what is happening, with the technicals reinforcing the downside bias.<\/p>\n

Looking at the hourly chart, the price has fallen to a new session low at 1.3983, extending back below the natural support at 1.4000.<\/p>\n

Earlier in the Asian-Pacific session, the pair dipped to 1.39963, but sellers could not sustain the break below 1.4000. The subsequent bounce took the price back toward the 50% midpoint of the move up from the August 21 low at 1.40149. The high reached 1.4018 before rotating back to the downside.<\/p>\n

Buyers had their shot above the midpoint. They could not build on it. The reversal to fresh lows keeps sellers in control.<\/p>\n

What comes next on the downside?<\/p>\n

The next downside target is an older swing area between 1.3948 and 1.3966, which originated back in late March. Sellers would first need to break below the upper boundary at 1.3966, opening the door for a test of 1.3948.<\/p>\n

The 61.8% retracement of the move up from the August low also sits near the lower boundary of that area. That adds to its importance as a potential support zone where buyers could lean and define their risk.<\/p>\n

Back on September 16, when the Federal Reserve raised rates to 4.0%, the price surged above that swing area. The rally ultimately carried USDCAD to a double top at 1.42984, reached on October 9 and October 14.<\/p>\n

A sustained break below 1.3948 and the nearby 61.8% retracement would give sellers another technical victory and shift attention toward the 200-day moving average at 1.38814.<\/p>\n

Seven consecutive lower closes?<\/p>\n

Since the second peak last Wednesday, USDCAD has closed lower for six consecutive trading days. Yesterday\u2019s close was near 1.4005. Stay below that level into today\u2019s close, and the losing streak would extend to seven.<\/p>\n

The sellers have the momentum. Now they need to keep breaking\u2014and staying below\u2014the next downside targets.<\/p>\n

What would hurt the downside momentum?<\/p>\n

The first step for buyers would be a move back above the 50% midpoint at 1.40149. Getting above and staying above that level would take some of the immediate pressure off the pair.<\/p>\n

Beyond that, buyers would need to work through two additional hurdles:<\/p>\n