USD/CAD edges lower after US data string, Fed minutes ahead

US dollar edged lower against its Canadian counterpart on Wednesday, following the release of mixed economic data out of the United States, while markets awaited the minutes of Federal Reserve Banks policy meeting in October.

USD/CAD recorded a session low at 1.0443 at 12:25 GMT, after which consolidation followed at 1.0447, losing 0.22% for the day. Support was likely to be found at November 19th low, 1.0415, while resistance was to be encountered at November 19th high, 1.0486.

According to data by the Department of Commerce, retail sales in the United States rose 0.4% in October compared to a month ago, marking the fastest monthly pace in three months and outperforming expectations of a 0.1% gain, which implied that consumer spending demonstrated resilience even during the 16 days of partial government shutdown. September’s result has been revised up to a flat performance from a 0.1% dip previously.

Core retail sales, which exclude automobile sales, climbed 0.2% in October, again above the projected 0.1% gain. In September retail sales ex autos increased 0.3%.

At the same time, the index of consumer prices in the United States dropped 0.1% in October on a monthly basis, due to lower prices of energy, clothing and new cars, following a 0.2% gain in September. October’s drop was the first since April.

The annualized consumer price index (CPI) slowed down to 1.0% in October, meeting projections and marking the smallest climb since October 2009. The CPI reached 1.2% during the preceding month.

Core consumer price index (CPI), which excludes volatile components such as costs of food and energy, rose 0.1% in October in line with preliminary estimates and matching the rate of increase during September. In annual terms, the core CPI advanced to 1.7% in October, also matching expectations.

However, both the overall and the core CPI remained still below Federal Reserve Bank’s inflationary objective of 2%, which is considered as providing price stability.

Last but not least, a separate report by the National Association of Realtors (NAR) revealed that the number of sold existing homes in the United States decreased to annualized 5.12 million units in October, or a second consecutive monthly drop, from 5.29 million units a month ago. Experts had anticipated that existing home sales will decline less in October, to 5.16 million units. According to NAR, Octobers sales have been the weakest since June. Higher mortgage rates seem to have had a continuous impact on housing market in the country, as Freddie Mac said that rates had climbed in June and had remained in proximity to 4.5% until mid-September. Compared to that, a year ago home buyers paid an average interest rate of 3.4% on mortgages.

Meanwhile, Canadian dollar preserved gains against its US rival, after a report by Statistics Canada showed earlier on Wednesday, that wholesale sales in Canada increased for a third consecutive month in September. Sales climbed 0.2% to reach 49.8 billion CAD (47.7 billion USD) in September, following another 0.4% gain in August, as the latter has been revised down from a 0.5% gain previously.

Canadian government bonds decreased for a second day in a row, while the yield on nations benchmark 10-year bond rose one basis point, or 0.01 percentage point, to reach 2.57%.

In addition, Royal Bank of Canada Governor Stephen Poloz and senior deputy governor, Tiff Macklem, are scheduled to take a statement in front of the Senate Committee on Banking, Trade and Commerce at 21:15 GMT today.

Elsewhere, the loonie, as Canadian currency is also known, was gaining against the euro, with EUR/CAD cross down 0.28% on a daily basis to trade at 1.4139 at 15:16 GMT. GBP/CAD pair rose 0.10% to trade at 1.6898 at 15:17 GMT.