USD/CAD rally continues on strong CPI

The Canadian dollar has posted gains for a third straight day. In the North American session, the pair is trading at 1.3418, down 0.30% on the day.

Canada consumer inflation jumps in June

There was good news on the inflation front, as consumer inflation climbed 0.8% in June. This was a strong improvement from 0.3% in May and marked the sharpest one-month gain since January 2017. The core read gained 0.4% after back-to-back declines. The strong inflation data comes on the heels of excellent retail sales numbers in May – the headline figure came in at 18.7% and the core reading posted a gain of 10.6%. Is the Canadian consumer feeling comfortable opening the purse strings? It will take more than one a few releases to answer that question, but this week’s consumer spending and inflation data are indicative that a recovery is underway.

USD/CAD Technical

USD/CAD posted slight gains late in the Asian session. The pair reversed directions and gave up these gains in European trade. USD/CAD has posted small losses in the North American session

• USD/CAD has tested support at 1.3412 in the North American session. The next support level is at 1.3362
• 1.3474 is the next line of resistance, followed by resistance at 1.3524
• USD/CAD broke through the 10-day MA on Monday. This is a bearish signal and the pair has continued to head lower.

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