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USDCAD advances after disappointing data from China

Daily Currency Update

The US dollar strengthened against the Canadian dollar on Monday following surprising economic data from China. Retail Sales and Industrial Production numbers for July both fell well short of expectations, which has led markets to seek the safety of the US dollar. China’s zero COVID-19 policy is having a huge impact on the world's second-largest economy as it continues to lockdown entire cities in an effort to stop the spread of coronavirus. Looking ahead this week,  US July retail sales is due on Wednesday, with economists forecasting a modest 0.1% increase. This data is the primary gauge of consumer spending, which accounts for the majority of overall economic activity. On Thursday, the US Federal Reserve will release the minutes of its latest monetary policy meeting providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates. USDCAD was up 0.97% at 1.2894 at the time of writing.

Key Movers

EURUSD fell below 1.02 on Monday as the safe-haven US dollar gained strength. The July Wholesale Price Index published by Germany fell by 0.4% month over month. EURUSD was trading around 1.01741 at the time of writing. GBPUSD also slipped back below 1.21 due to broad USD strength and continuing concerns over the UK economy. Data released on Friday saw UK GDP for April-June contract by 0.1%. Although slightly better than expectations, the energy cost spending squeeze we are set to see over the winter means that sterling’s gains are likely to be limited as households are stretched financially to cover the skyrocketing costs of heating bills. This week’s main event from the UK will be Wednesday's CPI print, which is expected to show inflation increase to 9.9% from 9.4%, its highest level in over 40 years. GBPUSD was trading around 1.2081 at the time of writing.

Expected Ranges

  • EUR/CAD: 1.3102 - 1.3202 ▲
  • GBP/CAD: 1.549 - 1.564 ▲
  • AUD/CAD: 0.9058 - 0.9102 ▼
  • USD/CAD: 1.2773 - 0.2933 ▲