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USDCAD – Can it Break The Range?
For nearly a month USDCAD has been stuck in a 1.3000 -- 1.3200 range as the vol in the pair compressed despite the fact that oil prices have held steady above the $50/bbl level. Part of the problem is that Canadian data has been mixed capping any rally in the loonie. This week’s Retail Sales printed significantly worse than expected at -0.3% versus 0.8% eyed.
Tomorrow the market will get another key data point as the CPI report will be released. The market is anticipating a rebound after two straight months of negative readings, but given the poor final demand numbers, the prospect of another deflationary month could be quite real. If Canadian inflation is actually contracting that could weigh on the loonie and push USDCAD through key resistance at 1.3200.
For now, however, the pair remains highly contained in 200 point range and looks like will remained capped by the 1.3000 -- 1.3200 levels.