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Canadian Dollar Rises As Core Retail Sales Growth Exceeds Forecast

05:30, 22nd August 2017

(RTTNews) - The Canadian dollar climbed against its major opponents in the European session on Tuesday, as the nation's core retail sales outpaced expectations in June, supporting hopes for a possible rate hike by the Bank of Canada again this year.

Data from Statistics Canada showed that retail sales rose for the fourth consecutive month in June, edging up 0.1 percent to C$49.0 billion

Nonetheless, the sales growth was slower than expectations for a 0.3 percent rise. The May reading was revised down to 0.5 percent from the initial estimate of 0.6 percent.

Core retail sales improved 0.7 percent on a seasonally adjusted monthly basis in June.

This was higher than the 0.3 percent increase forecast by economists. In May, the core retail sales dropped by 0.1 percent.

Investors focus on the Fed's annual Jackson Hole symposium commencing on Thursday, with the key theme to be "Fostering a dynamic global economy."

Fed's chair Yellen will be speaking on financial stability, while ECB President Mario Draghi is expected to stick to 'the script of the conference' rather than talking of monetary policy pullback.

The loonie traded mixed in the Asian session. While the currency rose against the yen and the euro, it held steady against the greenback and the aussie.

Reversing from an early low of 1.2595 against the greenback, the loonie climbed to a 3-week high of 1.2526. Further gains may take the loonie to a resistance around the 1.23 region.

Extending early rally, the loonie spiked up to a 3-week high of 1.4728 against the euro. The loonie is seen finding resistance around the 1.46 mark.

Survey data from the Mannheim-based Centre for European Economic Research/ZEW showed that the ZEW Indicator of Economic Sentiment declined to 10.0 in August from 17.5 in July. This was the lowest score since October 2016, when the reading was 6.2.

The indicator remained significantly below the long-term average of 23.8 points and the expected level of 15.0.

After a brief pause, the loonie resumed its early rally and touched a 5-day peak of 87.36 against the yen. Continuation of the loonie's uptrend may see it challenging resistance around the 88.6 area.

Data from the Japan Chain Stores Association showed that Japan's supermarket sales remained flat in July.

Supermarket sales showed nil growth in July. Before store adjustment, supermarket sales slid 0.1 percent.

The loonie that ended Monday's trading at 0.9968 against the aussie strengthened to near a 4-week high of 0.9905. On the upside, 0.98 is likely seen as the next resistance for the loonie.