USD/CAD Slips as Weak Canadian Retail Data Weighs on the Loonie

In October, retail sales declined by 0.2% to CAD 69.4 billion, with contractions recorded in four of nine subsectors. Core retail sales fell by 0.5%, marking the second consecutive month of negative dynamics. The sharpest declines were seen in food and beverage sales (–2.0%) and alcohol (–10.6%). Slower activity was also observed among clothing, accessories, and footwear retailers (–0.7%), as well as personal care products (–0.3%).

On the positive side, the strongest growth was recorded in furniture, electronics, and household appliance sales (+1.1%), while vehicle and auto parts sales rebounded from –2.9% to +0.6%. E-commerce sales slipped by 0.3%, bringing the total to CAD 4.1 billion, or 6.0% of overall retail turnover.

The US dollar continues to show uneven dynamics, but during today’s session the USDX index extended its rebound, trading near 98.20 after recently touching a local low at 97.40. This week, attention remains focused on US housing statistics. On Friday, November existing home sales rose from 4.11 million to 4.13 million, marking the highest reading since February, although still falling short of the consensus forecast of 4.15 million.

Tomorrow at 15:30 (GMT+2), data on building permits and housing starts will be released. Analysts expect both indicators to show positive momentum, with permits increasing from 1.330 million to 1.340 million and housing starts rising from 1.307 million to 1.320 million. If confirmed, these figures could signal a notable recovery in the housing sector following a prolonged period of stagnation observed since spring.

Support and Resistance Levels

On the daily chart, the instrument remains below the support line of the ascending channel, with boundaries located at 1.4250–1.3940.

Technical indicators strengthen the sell signal: the Alligator indicator’s range is expanding, fast EMAs are actively diverging from the signal line, and the AO histogram is forming corrective bars well below the zero line.

Resistance levels: 1.3840, 1.4050.

Support levels: 1.3750, 1.3560.

Trading Scenarios and USD/CAD Forecast

Short positions can be opened after a decline and consolidation below the 1.3750 level, with a target at 1.3560. Stop loss — 1.3810. Time horizon: 7 days or more.

Long positions may be considered after a breakout and consolidation above 1.3840, targeting 1.4050. Stop loss — 1.3760.