When are the Canadian retail sales and how could they affect USD/CAD?

Canadian retail sales overview

Statistics Canada will publish the monthly retail sales report for July later this Friday at 12:30 GMT. Consensus estimates point to a strong reading for the headlines sales, which is anticipated to show a strong 0.6% growth during the reported month. Meanwhile, core sales - excluding automobiles - is expected to show a deceleration from the previous month's upbeat reading of 0.9%, still post a growth of 0.3%.
 
Analysts at TD Securities also expect the Canadian retail sales to post a 0.9% increase in July, helped by stronger auto sales and higher prices for consumer goods. “The latter should translate into a more moderate increase in real retail sales although the report should still provide a strong signal for Q3 consumption after a disappointing performance from the Canadian consumer in Q2.”

Deviation impact on USD/CAD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to be in the range of 38-43 pips in case of deviations up to +0.38 to -0.58, although in some cases, if notable enough, can fuel movements of up to 73-76 pips in the subsequent 4-hours.

How could it affect USD/CAD?

Ahead of the key release, the pair held steady above mid-1.3200s, albeit lacked any firm directional bias. A surprisingly stronger reading might be enough to prompt some follow-through long-unwinding trade and extend the pair's overnight rejection slide from the very important 200-day SMA barrier, just above the 1.3300 handle. The downward trajectory might then turn the pair vulnerable to head back towards challenging weekly bearish gap opening lows near the 1.3200 round-figure mark.
 
Alternatively, a weaker reading might provide some temporary boost to the major, through the mentioned 1.3300 resistance zone might continue to cap the upside. However, a sustained breakthrough might prompt some intraday short-covering move and accelerate the move up back towards monthly tops - near the 1.3380-85 region.

Key Notes

Canada: Retail Sales to tick higher in July – Scotiabank
 
USD/CAD ticks higher, holds comfortably above mid-1.3200s ahead of Canadian retail sales
 
USD/CAD Intraday: key resistance at 1.3275

About Canadian retail sales

The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.