USD/CAD clings to gains above 1.4100; looks to US macro data before the next leg up

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The USD/CAD pair trades with a positive bias for the fifth consecutive day and holds steady above the 1.4100 mark through the early European session on Tuesday.

USD/CAD sticks to a positive bias for the fifth straight day amid a supportive fundamental backdrop.
Sliding Crude Oil prices undermine the Loonie and act as a tailwind for the pair amid a bullish USD.
Traders now look to this week’s important macro data from the US and Canada for a fresh impetus.

The USD/CAD pair trades with a positive bias for the fifth consecutive day and holds steady above the 1.4100 mark through the early European session on Tuesday. Moreover, spot prices remain close to an over two-week top touched last Friday and seem poised to appreciate further amid a supportive fundamental backdrop.

Crude Oil prices struggle to capitalize on the previous day's bounce from a one-month low and meet with a fresh supply amid concerns that supply will exceed demand next year. This, in turn, is seen undermining the commodity-linked Loonie, which, along with the underlying bullish sentiment surrounding the US Dollar (USD), turns out to be a key factor acting as a tailwind for the USD/CAD pair.

Meanwhile, traders ramped up for another interest rate cut by the US Federal Reserve (Fed) in December following the recent comments from influential FOMC members. This, in turn, keeps a lid on further gains for the USD and the USD/CAD pair. Traders also seem reluctant to place aggressive directional bets and opt to wait for important macro releases from the US and Canada, due this week.

A rather busy week kicks off with the delayed release of the US Producer Price Index (PPI) and Retail Sales, which will be followed by Pending Home Sales and the Richmond Manufacturing Index. Apart from this, investors will confront the US Durable Goods Orders on Thursday and the monthly Canadian GDP print on Friday, which, in turn, should provide some meaningful impetus to the USD/CAD pair.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.