Canadian retail sales due and UK PM Truss resigns

USD/CAD => The pair rises towards 1.38

American Express => The stocks holds over 142

FTSE=> The index falls towards 6900

Loonie rises ahead of retail sales

USD/CAD fell below 1.3700 yesterday on broad USD weakness and as oil prices pushed higher before rebounding higher. The USD recovered after better-than-forecast U.S. jobless claims. Initial claims fell to 214k, down from 228k, surprising the market, which was expecting a rise in claims. Meanwhile, oil, Canada’s main export, briefly rose on optimism that China would reduce some COVID quarantine restrictions for travellers, a situation which could boost oil demand, before giving back gains. Today attention turns to Canadian retail sales, which are expected to rise in August after falling in July as higher interest rates started to affect consumer habits. The BoC has raised interest rates by 300 basis points this hiking cycle so far and is expected to hike again next week.

Cad retail salesExpected: 0.2% (2.7%)
Previous: -2.5%

Where might the USDCAD price head to?

USD/CAD trades above its 20 sma, which could offer support at 1.3730. A break below here could see support at 1.3650, the weekly low comes into play. Should sellers break below this level in a meaningful way, then support at 1.35, the psychological level could come into target. On the flip side, should buyers return, fuelling a bullish recovery resistance can be seen at 1.3840, the September high, with a break above here bringing the 2022 high above 1.39 back into the picture. 

American Express Q3 earnings preview

American Express is due to release Q3 earnings today. The figures come as the share price trades down 15% so far this year, outperforming the broader market, which trades down 23% year to date. American Express, along with its peers Visa, and Mastercard, which report next week, is expected to benefit from the rebound in travel, one of its biggest revenue contributors. So far, the US consumer has proved to be resilient, and this is expected to show up in the results. Pent-up demand for travel, in addition to inflation, means credit card spending is likely to have risen significantly in Q3. Looking ahead, rising recession fears and interest rates could crimp spending going forward. However, so far, American Express appears well positioned as credit losses remain in check, as their clients tend to have larger incomes, so are less impacted by inflation.

FTSE closed higher as Truss resigns

The FTSE 100 closed 0.3% higher on the day the PM Liz Truss reigned. After just 44 chaotic days, she was the shortest-serving British prime minister. After the badly received mini-budget and Chancellor Hunt rolled back most of the measures, she was left with little credibility. Attention is now on who will replace her? Votes are expected to start on Monday, with ex-PM Boris Johnson in the lead over former Chancellor Rishi Sunak. Today the FTSE is falling as UK retail sales come under the spotlight. Sales are expected to decline further as households continue to feel the squeeze on incomes as inflation rises to double digits.

UK retail salesExpected: -0.3% (1.3%)
Previous: -1.6%

Support can be found at 6895 (weekly low) and 6790 (October 3 low).

Resistance for the index can be seen at 7000 (weekly high) and 7100 (weekly high).

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