AUD/CAD Bears May Have to Pause if Canadian Retail Sales Growth Drops to 0.5%
Last Updated on May 14, 2021
AUD/CAD Forecast – 13th May 2021
Australia – MI Inflation Gauge
On Thursday, at GMT 1:00 a.m., the Melbourne Institute released the month-over-month MI Inflation Gauge data. It measures the changes in the price of goods and services purchased by consumers in Australia.
The MI Inflation Gauge provides a monthly look at consumer inflation. Also, it is designed to mimic the quarterly government-released CPI data. The MI Inflation Gauge can act as a leading indicator of consumer inflation. As the Reserve Bank of Australia increases interest rates to reduce inflation, brokers in Australia consider this data to be important for future economic forecasts in the country.
Last month, the MI Inflation Gauge came out at 3.2%. If the positive trend continues, it will likely have a bullish effect on the Australian Dollar.
Canada – Core Retail Sales
On Friday, at GMT 12:30 p.m., Statistics Canada released the month-over-month core retail sales figure. It measures the changes in the total value of products and services in the retail segment. Automobile prices tend to be volatile. The core retail sales figure excludes it and offers a better gauge of the retail sales.
The core retail sales data are considered by Forex traders as the primary gauge of consumer spending. It accounts for the bulk of the overall economic activities in the country. Therefore, it is a vital leading indicator of the economy as well.
Last month, the Canadian core retail sales increased by 8.4%. This month, analysts are expecting it to increase by 0.5%.
The AUD/CAD remained bearish since the end of February 2021. Over the last few months, it fell by around 600 pips, from 0.9993. Currently, it is trading near the support around 0.9400 level. If the pair fails to close below this support, it will likely prompt a retracement move from here.
The Australian MI Inflation Expectations remained optimistic last month and the trend will likely continue. By contrast, the Canadian core retail sales might reverse course and fall from 8.4% to 0.5%. We believe it would set a bullish fundamental outlook for the AUD/CAD this week. Therefore, if the AUD/CAD closes above the support near 0.9400, it would likely attract additional bullish momentum in the market.
Hence, CFD traders should look out for trading opportunities above this major support level around 0.9400.
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