USD/CAD turns choppy below 1.3200 ahead of Canadian Retail Sales

• USD/CAD turns lackluster below 1.3200 as the focus shifts to Canadian Retail Sales data.
• Canada’s consumer spending is expected to expand at a slower pace.
• Market participants are anticipating the interest rate hike on July 27 by the Fed would be the last nail in the coffin.

The USD/CAD is demonstrating a non-directional performance below the round-level resistance of 0.3200 in the London session. The Loonie asset is awaiting the release of the Canadian Retail Sales data for May for meaningful action.

S&P500 futures have generated decent gains in Europe, portraying that overall negative market sentiment has started easing now. US equities are under pressure as corporate earnings season has kicked off. The US Dollar Index (DXY) is making efforts for stability above the crucial resistance of 101.00.

A power-pack action is expected in the Canadian Dollar as Statistics Canada will report monthly Retail Sales data for May at 12:30 GMT. As per the estimates, the economic data expanded at a pace of 0.5%, which is slower than the figure recorded for April at 1.1%. Retail Sales excluding automobiles are seen increasing by 0.3% but lower than the 1.3% pace recorded earlier.

This indicates that momentum in consumer spending might be slowed in May but remain resilient. Also, the preliminary data indicates that demand for automobiles is decent than other durable and non-durable goods. This would portray a rise in demand for big-ticket items in spite of higher interest rates by the Bank of Canada (BoC).

Meanwhile, the US Dollar Index is gaining strength amid a cautious market mood as investors seem convinced about one more 25 basis points (bps) interest rate hike from the Federal Reserve (Fed), which will push interest rates to 5.25-5.50%.

On the oil front, oil prices have sensed selling pressure above $76.50, however, the upside bias is intact as the market participants are anticipating the interest rate hike on July 27 by the Fed would be the last nail in the coffin.

It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices would strengthen the Canadian Dollar.