Most of the attention may focus today around the Canadian currency due to a number of publications from Canada. Today we will learn about Canadian retail sales for October, where the market consensus assumes sales increase by 0.3% in monthly terms as compared to an increase of 0.1% in the previous period. In addition, CPI inflation will be released, where it is expected to accelerate this indicator to 2.0% from 1.4% per annum. In the case of the core index, the indicator is expected to slightly slow down to 0.8% from 0.9% per annum. In particular, inflation data will be monitored due to the recent return of the bank of Canada comments towards more hawkish monetary policy. Although in the opinion of the bank stronger than anticipated increase in inflation results from temporary factors (mainly energy prices), it is worth noting that measures of core inflation have increased in recent months. BoC openly admitted that further interest rate hikes will be required in the future, so a higher inflation reading and retail sales should support CAD across the board
Let's now take a look at the USD/CAD technical picture in the H4 time frame. The market has tested the technical resistance at the level of 1.2919 four times already, but the bulls were too weak to break out above this level. The market remains in a sideways consolidation zone between the levels of 1.2620 - 1.2919 with neutral momentum at the time of writing. Better than expected data from Canada may become an impulse to go below the round level of 1.2800.
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