CAD CPI Preview: what to expect of USD/CAD

Canadian inflation figures for the month of June and May’s retail sales are due later in the NA session.

Market consensus expects headline consumer prices to have risen 0.1% on a monthly basis during last month, while Core prices measured by the Bank of Canada are expected to come in flat inter-month.

Regarding Retail Sales, market bets are seen flat on a monthly basis during May while Core sales would have expanded 0.3%.

FX-wise, strategists at TD Securities note “We still think CAD remains vulnerable to a shift in data surprises between the US and Canada. As we recently noted USD/CAD continues to trail behind the spread between US and Canada data surprises. We believe further softening of Canada data will help to drive the squeeze in market positioning since CAD longs still look overextended against recent history… We are looking for a break of the 1.31 level that opens up a move back to 1.33”.