The Canadian Dollar (CAD) managed to close Friday higher against the US Dollar (USD), defying a weak domestic data print and broader Greenback strength. The Loonie gained 0.15% on the day, second only to one major currency, after recovering 0.41% from its intraday lows against the Greenback.
Canadian Retail Sales disappoint but revisions soften the blow
July’s Retail Sales release showed a 0.8% contraction, in line with expectations, while core Retail Sales fell 1.2%, a sharper drop than the -0.7% forecast. However, upward revisions to June’s figures—core Retail Sales adjusted to 2.2% from the prior 1.9%—helped cushion sentiment and limited the downside for CAD traders.
Despite the weak headline numbers, the impact on the currency was muted, with traders largely dismissing the backward-looking data. The lack of fresh domestic catalysts leaves the Canadian Dollar increasingly exposed to shifts in US data and Fed policy expectations.
Daily market movers: CAD outperforms peers
- CAD pushed higher despite weak Retail Sales, supported by improved revisions to prior data.
- USD/CAD continues to test support around the 50-day Exponential Moving Average (EMA) near 1.3785.
- The pair is leaning into the lower end of a developing triple-bottom formation, with a demand zone emerging near 1.3740.
- Upcoming US releases, including PMIs, GDP and the Fed’s preferred inflation measure—the Core PCE—will set the tone for next week.
Canadian Dollar price forecast
While the Loonie ended the week on firmer footing, USD/CAD remains constrained within recent ranges. A sustained break below 1.3740 could trigger further downside momentum, while resistance is seen at the 50-day EMA around 1.3785. Broader sentiment will remain tied to US data releases and Fed rate cut expectations in the weeks ahead.
