CAD Edges Higher Following USD’s Decline

The Canadian dollar edged higher against the US dollar on Friday, gaining 0.18%. This rise comes as US dollar demand cooled, fueled by weaker-than-expected US retail sales figures for January. While the decline in retail sales wasn’t enough to fully dampen investor risk appetite, it did weaken the US dollar. The DXY Index points to 106.77; down -0.27% at the time of writing.

Canada had a quiet week on the economic front, but all eyes are now on next Tuesday’s Canadian Consumer Price Index (CPI) release. The US retail sales contraction of 0.9% in January significantly missed the projected 0.1% decline. Although December’s figures were revised upward, the January drop still impacted the US dollar. Conversely, US Industrial Production, while beating forecasts, still showed a decline. Despite this mixed bag of data, positive revisions to previous figures are keeping market sentiment generally positive.
The Canadian dollar’s modest gains mark its fourth consecutive session of appreciation against the US dollar. However, bullish momentum remains weak. USD/CAD has dipped below the 50-day EMA around 1.4280, but strong support is expected at the 200-day EMA, just below 1.4000.