USDCAD TECHS: Remains Above Support For Now

The June retail sales release helps wrap up the last major data before Canadian Q2 GDP is released on Friday August 29. 

• Current Bloomberg analyst consensus shows Q2 is expected to show a 0.7% Q/Q annualized contraction, versus +2.2% in Q1. The private sector consensus is more optimistic than the Bank of Canada's -1.5% estimate in its July Monetary Policy Report (which MNI thinks is too low) but the component-by-component breakdown is similar if of differing magnitudes.
• Widely expected are: a softening in household consumption growth (+1.2% in Q1), with a pickup in government spending, continued weakness in fixed investment (-3.0% in Q1) though with residential outperforming business capital formation, and a reversal of Q2's positive contribution from net exports. In short, the data are expected to confirm that trade activity was brought forward to Q1 ahead of tariffs, with the effects reversing in Q2.
• Going forward, the BOC envisages growth resuming in Q3 (+1.0% in its "current tariff" scenario). In the meantime, a weak Q2 reading could provide Governing Council with more conviction to resume easing rates in September, with the July meeting decision noting "If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate".

• Treasuries look to finish near session highs - after gapping higher following Fed Chairman Powell's dovish speech from the Jackson Hole, Wy symposium. Sep'25 10Y contract trades +19 at 112-04.5 after the bell vs. 112-08 high, 10Y yield -.0739 at 4.2537% vs. 4.2402% low.
• Technical resistance attention on 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-23 initially, the May 1 high.
• The major near-term policy signal takeaway from Fed Chair Powell's Jackson Hole keynote (link) is that he only acknowledges that "with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance", but also that the risks appear to have shifted since the July meeting ("The balance of risks appears to be shifting"), as "downside risks to employment are rising.
• Boston Fed President Collins: Sep cut not a done deal as "risks on the two sides have come into rough balance. So, that is a really complex context for monetary policy, when you could see the unemployment rate rising and you could see higher inflation. You know, my baseline is not one that is as concerned about inflation expectations rising at the moment. Earlier in the year I had more concerns about that.
• Focus in the coming week shifts to any further policy signaling from central bank officials at Jackson Hole. BoE's Bailey, ECB's Lagarde, BoJ's Ueda, Riksbank's Thedeen and several more FOMC members are in attendence - meaning it should be a busy weekend for central bank commentary.

• RES 4: 0.6688 High Nov 7 ‘24
• RES 3: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
• RES 2: 0.6569/6625 High Aug 14 / 24 and the bull trigger 
• RES 1: 0.6494/0.6501 50-day EMA/High Aug 22
• PRICE: 0.6486 @ 16:51 BST Aug 22
• SUP 1: 0.6415 Low Aug 21
• SUP 2: 0.6373 Low Jun 23 
• SUP 3: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg  
• SUP 4: 0.6323 Low Apr 16

AUDUSD surged Friday, reversing a large part of the week’s weakness and break of support. The correction higher is infitting with the underlying uptrend, with the medium-term condition remaining bullish for now. The first important resistance to watch is 0.6494, the 50-day EMA - a level pierced on Friday. The recent sell-off resulted in a print below support at 0.6419, the Aug 1 low and a bear trigger. A return lower and clear break back below this level would strengthen a bear theme and expose 0.6373, the Jun 23 low and an important support.