The Canadian Dollar (CAD) staged a minor recovery on Friday, gaining ground against most major currencies and clawing back a tenth of a percent against the US Dollar (USD). This resilience came despite weaker-than-expected Canadian manufacturing and wholesale sales data, as market focus shifted to a surprising decline in the University of Michigan’s (UoM) Consumer Sentiment Index.
Data Disappointments and Shifting Sentiment
While Canadian manufacturing and wholesale sales showed a milder-than-expected recovery in April, the market’s attention was captured by the UoM Consumer Sentiment Index, which plunged to a six-month low in June. Additionally, the UoM 5-year Consumer Inflation Expectations rose, indicating growing concerns about future price pressures.
Canadian Dollar Outlook: Data and US Retail Sales in Focus
The Canadian Dollar is expected to remain sensitive to broader market sentiment in the coming week, with limited domestic data releases. The US Retail Sales report on Tuesday will be a key indicator to watch for potential impact on the CAD.
Technical Analysis: CAD’s Choppy Trading Continues
The Canadian Dollar’s performance on Friday was mixed, with gains against the Pound Sterling, Euro, and New Zealand Dollar offsetting a slight decline against the Swiss Franc. USD/CAD remains volatile, hovering above the 200-hour Exponential Moving Average (EMA) but struggling to break through recent highs.
The pair is currently trading below 1.3740, with near-term momentum favoring the bears. Unless renewed buying pressure emerges, USD/CAD could test the 50-day EMA at 1.3670. However, a break above June’s peak near 1.3790 could signal a shift in sentiment.
