At the beginning of the year, many people did not believe the Canadian dollar could hit parity with the US dollar, but for the first time in over 30 years, 1 US Dollar is worth 1 Canadian dollar.
Although USD/CAD has rebounded since hitting an intraday low of 0.9993, the possibility of solid retail sales tomorrow could be all it takes to bring the currency pair back below parity. Canadian wholesale sales were released today and in the past, we have found wholesale sales to be an incredibly accurate leading indicator of retail sales. Therefore the 2.0 percent rise in wholesale sales suggests that we could see a sharp rise in retail sales tomorrow as well. Right now the market is expecting flat Canadian retail sales, so it will not take much for the number to surprise to the upside. The Australian and New Zealand dollars also extended their gains on the back of higher gold prices despite mixed economic data. Australian new home sales dropped 8.6 percent while the New Zealand trade deficit narrowed from NZD 2.20 billion to NZD 2.91 billion.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com