US INFLATION: MNI US Inflation Insight: Firm Core Prices Seal Deal For Hike

• RES 4: 1.4175 High Jul 13
• RES 3: 1.4129 High Jul 28  
• RES 2: 1.4080 High Aug 4 and 5 
• RES 1: 1.4023 50-day EMA  
• PRICE: 1.3945 @ 18:17 BST Aug 12
• SUP 1: 1.3908 Low Aug 12
• SUP 2: 1.3899 50.0% retracement of the May 1 - Jun 24 bull cycle  
• SUP 3: 1.3867 Low May 6
• SUP 4: 1.3817 61.8% retracement of the May 1 - Jun 24 bull cycle 

A fresh short-term cycle low in USDCAD again on Wednesday confirms an extension of the bear leg that started Jun 24. The pair continues to trade below the 50-day EMA at 1.4023, and scope is seen for a deeper retracement of the May 1 - Jun 24 bull leg. Sights are on 1.3899, a Fibonacci retracement. Note that it is still possible that the current bear leg is a correction - medium-term signals remain bullish. Initial resistance is 1.4023, the 50-day EMA.  

Some analyst thoughts on the upcoming July retail sales report:

• TD Securities: "Retail sales likely declined 0.2% m/m in July following an already subdued 0.2% increase in June. The first decline since January will likely be led by negative auto and gas sales. Control group sales were likely flat partly due to normalization after Amazon Prime Day."
• Jefferies: "lower gasoline prices and softer unit sales of autos suggests that the headline will be weaker than the control group and other "ex-" splits. We expect +0.1% m/m in total, with control group +0.4% and ex-autos and gas +0.5%. We should see a modest bump in spending related to the World Cup, though there could be some payback in August."
• Deutsche: "retail sales will [] be noteworthy for the first glimpse into Q3 spending. Though lower gasoline prices should drag on headline (+0.1% vs. +0.2%), ex-auto sales (+0.5% vs. -0.2%) and retail control (+0.4% vs. +0.5%) should post sturdy gains."
• NatWest: "Excluding autos and gasoline, we project core retail sales to have increased marginally (forecast 0.2%) following a gain (0.4%) in June. Although still positive, our forecast would mark a moderation from the average monthly increase of 0.6% recorded during the first half of the year.... Some cooling would not be surprising following such a strong first-half pace, particularly as gasoline prices remain elevated relative to pre-war levels. With households having supported spending partly by saving less, and the earlier boost from tax refunds having faded, the cumulative pressure from elevated energy costs may increasingly limit their capacity to sustain the strength in non-energy related spending. The latest Beige Book offered some support for this view, noting that higher prices, particularly for fuel, dampened sales in other categories and noted “Several Districts noted declines in spending on discretionary items or trading down to more affordable varieties”.

• RES 4: 0.7181 76.4% retracement of the May 6 - Jun 30 bear leg
• RES 3: 0.7144 High Jun 5
• RES 2: 0.7120 61.8% retracement of the May 6 - Jun 30 bear leg 
• RES 1: 0.7088 High Jun 15
• PRICE: 0.7063 @ 18:16 BST Aug 12
• SUP 1: 0.7015/0.6922 50-day EMA / Low Jul 29 
• SUP 2: 0.6907 Low Jul 8
• SUP 3: 0.6865 Low Jun 30 and the bear trigger 
• SUP 4: 0.6757 38.2% retracement of the Apr 9 ‘25 - May 6 bull cyle

A bull cycle in AUDUSD remains intact for now and Wednesday’s gains reinforce a bullish theme. Price has recently breached the 50-day EMA, at 0.7015, highlighting a stronger recovery and 0.7071, 50.0% of the May 6 - Jun 30 bear leg, has been cleared. A continuation higher would pave the way for an extension towards 0.7112, the 61.8% retracement. The first important support lies at 0.6922, the Jul 29 low.