USDCAD TECHS: Shallow Bounce Off Lows

• RES 4: 1.3920 High May 21  
• RES 3: 1.3862 High May 29 
• RES 2: 1.3798 High Jun 23  
• RES 1: 1.3749 50-day EMA 
• PRICE: 1.3697 @ 17:10 BST Jul 16
• SUP 1: 1.3557 Low Jul 03
• SUP 2: 1.3540 Low Jun 16 and the bear trigger
• SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
• SUP 4: 1.3473 Low Oct 2 2024

USDCAD faded fast off intraday highs. The 50-day EMA was very briefly pierced, but sharp intraday volatility dragged the price lower into the close. This affirms the view that short-term gains appear corrective. As such, resistance at the 50-day EMA, at 1.3749 remains valid. A clear break of the EMA would signal scope for a stronger recovery and highlight a possible reversal. For bears, sights are on key support at 1.3540, the Jun 16 low. Clearance of this level would confirm a resumption of the downtrend and open 1.3503, a Fibonacci projection.

Below is a diversity of analyst outlooks for the June advance retail sales report - listed from highest to lowest on June Control Group retail sales expectations. Note that, as pointed out in our preview, there is broad expectation that Control Group growth will exceed that of headline retail sales. We also note mixed opinions on food services/drinking places spending, which is not in the Control Group category: 

• BofA: (0.7% headline, 0.9% Control Group): "Tariffs might have contributed to the strength in retail spending in June. But real spending should still be robust if our June forecast is correct. Investors should keep an eye on the food services category to assess whether tariffs are weighing on discretionary services...retail spending was more robust in June in the BAC card data, rising 0.7% m/m SA. In fact, spending growth picked up in all major retail sales categories that we report. The biggest increases were in gas (due to higher prices), general merchandise, clothing, home improvement and groceries."
• Citi (0.4% headline, 0.5% Control Group): "Retail sales have been weaker in the last two months after a strong increase in March, mainly reflecting front loading and then normalization in auto sales likely due to the implementation of auto tariffs. Overall Q2 consumption growth should be stronger than in Q1 but slower than the pace of consumption growth last year... We pencil in roughly flat auto sales... Restaurant spending the only services category in the retail sales report could rebound somewhat in June after falling in May, but we see downside risk... another ~1%MoM increase in non-store sales. If consumer goods prices start to pick up more in June data and in coming months, it will be important to look at real goods spending for a better sense of the real growth trajectory. We expect further slowing in real consumption growth in the second half of the year."
• Deutsche (0.2% headline, 0.3% Control Group): "Should our forecast for retail control end up close to the mark, the series would be up 3.6% annualized for Q2, down slightly from 3.8% annualized in Q1 and in line with our forecast for Q2 real PCE growth of 2.5%.
• Wells Fargo (0.0% headline, 0.3% Control Group): "We believe the control measure may overstate the strength of underlying spending today. Only half of all retailers reported a pickup in sales activity last month, which suggests tariffs may be negatively affecting consumer behavior...Some positive payback [in auto sales] may be forthcoming, given recent signs of a pickup in auto sales. Meanwhile, ecommerce sales, another large category, continues to outperform and offset weakness elsewhere."
• TD Securities: (0.1% headline, 0.1% Control Group): "Our forecast assumes a less acute m/m contraction in auto sales along with a rebound in sales at gasoline stations. However, we expect a moderation in control group sales to 0.1% m/m from 0.4% previously. We expect that the only services category, sales at food services and drinking places, will rebound sharply to a 1.0% m/m gain after declining 0.9% m/m in May. Note that retail sales is largely goods spending and only translates to less than a third of monthly personal spending as calculated by the BEA."
• UBS (-0.2% headline, 0.2% Control Group): "we expect the only component of the retail sales report which captures services spending — sales at food services and drinking places — to be soft again in June...We expect retail and food services sales fell in June, held down by autos, light trucks and sales at gas stations. Sales at the control group of stores we expect fares better and moves up 0.2% in June. Often though, revisions can be the bigger signal. Real consumer spending has been relatively weak thus far this year, down year-to-date in real terms and running just 1.2% annualized over the last four months. That should smooth through any pull-forward due to tariffs as well. Despite the upbeat narrative, the hard data does not look that great."

• Treasuries look to finish near moderate late session highs, early support after lower than expected PPI inflation measures leavened by up-revisions to May reads. The main headline reading was flat PPI % M/M (0.01% unrounded), vs expectations of a 0.2% rise (though this was offset by an upward revision to May, to 0.30% from 0.13%). That left Y/Y PPI at the softest level (2.3%) since September 2024, and down from 2.7% in May.
• Industrial production rose by 0.3% M/M in June (0.1% expected), a figure that looks even more solid when considering the upward revision to prior (May 0.0%, albeit very slightly negative unrounded at -0.03%, rev from -0.2%). Capacity utilization unexpectedly rose to 77.6% (expected unchanged at 77.4%, rev up to 77.5% in May).
• Tsys pared gains after headlines that Pre Trump asked GOP lawmakers if he should fire Fed Chairman Powell now - before the end of his term in May 2026. US$ and equities reacted more sharply, both selling off on the chatter before rebounding late morning after Trump denied reports of an imminent termination of the Fed Chair (unless cause found under pretense of funds misuse for Fed headquarter renovation).
• Currently, Sep'25 10Y contract trades +11 at 110-20 vs. 110-21.5 high. Initial technical resistance above at 111-01 (20-day EMA). Support below at 110-08.5 (Low Jul 14). Curves bounced off lows on wide ranges: 2s10s +2.641 at 56.381; 5s30s +4.649 at 102.55p vs. 107.895 high - highest intraday level since October 2021.
• Focus turns to Thursday's weekly jobless claims, Retail Sales, Import/Export Prices and TIC flows as well as several Fed speakers ahead the start of late Friday's policy Blackout.