Preview of Canada Core Retails Sales: What to Expect With USDCAD

Summary:
• The Canada Core Retail Sales and Retail Sales data will be released during the NY session, and is expected to have moderate market volatility.

The Canada Core Retail Sales figure for the month of September 2019 is due for release today. Usually, two sets of data are released: the Retail Sales and the core Retail Sales, which is the retail sales figure minus the sales that come from automobiles. The Canada Core Retail sales figure has heavier market impact and is the figure under focus.

Economists expect the retail sales figure to have remained stagnant at 0.4%, but a pickup in car sales may push up the retail sales figure beyond market expectations. The fall in passenger car sales was countered by an increase in sales of light trucks.

For the core component of the report, economists are forecasting an increase from the previous figure of -0.1% to 0.0%. Now that the Canadian election is done and dusted with a narrow win for the ruling Liberals, it is time for traders to focus on the data set without undue interference from an unexpected election result.

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Trading the USDCAD on the Canada Core Retail Sales Data

The USDCAD was able to push further downwards, almost as far as the immediate support level of 1.3065 which I pointed out in my analysis of this pair yesterday. However, the pair recovered on news that the incumbent party in the country retained power and is to form a minority government.

The deviation to work with in terms of trading the Canada Core Retail Sales figure is 0.1%. If the figure comes in at 0.1% or higher, this is deemed CAD-positive. USDCAD could then resume its downward trajectory, aiming for 1.3015 (lows of July 12 and 19) as the initial target.

If the data comes in at -0.1% or more negative, this would be deemed CAD-negative, which opens the door for a push towards the 23.6% Fibonacci level of 1.3150 (highs of July 1 and 9, and cluster of lows between September 9-11 in role reversal).

Traders must be aware that the Bank of Canada will release its Business Outlook Survey about one and a half hours later. This may interfere with price action so any trades performed on the retail sales outcome must be done with this in mind.