Risk momentum builds up as Thanksgiving weekend approaches. However, the Canadian dollar is projected to close the week in losses opposite its fellow commodity currency, Australian dollar, as data this week from China bolstered demand for the Asian currency. Meanwhile, retail sales figures from Canada disappointed investors and leads traders to purchases of the Aussie instead.
Statistics Canada reported yesterday that retail sales in September failed the 0.5 percent median estimate of economists for both the headline and core data. Headline sales rose 0.1 percent to C$39.1 Billion for the third consecutive increase. Gains at new car dealers were offset by declines at department stores and gasoline stations, according to the report. As for Core Retail Sales, purchases were little changed at C$30.3 Billion in September. Core data came out at 0.0 percent for the period.
According to a Bloomberg economist survey, the nation’s economic growth rate could likely remain less than 2 percent through the rest of this year. Consumers are reacting to slow employment growth and tighter rules on mortgage borrowing that Finance Minister Jim Flaherty imposed in July to ease the risk of a housing bubble.
Contrasting the weakness in the Maple Leaf, Bloomberg reports that the improving outlook for the second largest economy in the world has helped buoy risk sentiment this week. The private report on Chinese manufacturing released yesterday indicates expansion for the first time in 13 months. China’s HSBC Flash PMI data rose to a high of 50.4 points in November, compared with a final level of 49.5 in October. Figures above 50 indicate growth. This is the latest indicator of recovery in the real economy following last month’s data which showed solid credit growth, firmer exports and rising industrial output. Positive developments in China, being Australia’s primary trading partner, have shown bullish effects on the Aussie this week.
These economic data are anticipated to weigh on the Loonie and lead AUDCAD traders to a buy bias as the trading week comes to an end. A buy position is recommended, but be wary of probable technical price corrections.
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