If you’re like us, you haven’t seen the inside of a retail store in months, and the Canadian dollar took a hit because of it. The Canadian dollar gave up about ½ cent against the US dollar due to weaker-than-expected retail sales in Canada. Retail numbers dropped 0.1% in February compared to the previous month. After the news, markets increased their bet that the Bank of Canada will start cutting interest rates in June to 55%, up from 50% before the report. While this is probably not the straw that breaks the camel’s back, it is yet another indication of a weakening Canadian economy and a depressed Canadian consumer.
The USD/CAD has spent most of the day around the 1.3710 range and touched the 1.3714 high from yesterday but has not been able to push past that level. The next test for the USD/CAD trading pair will be Thursday’s US GDP numbers followed by Friday’s Core PCE Price Index, which is the Fed’s preferred inflation measure.
If the US GDP number and inflation number beat market expectations, then expect the Canadian dollar to test the 1.38 resistance level. However, if either number disappoints, then you could see the USD/CAD fall to the 1.36 range.
The Canadian dollar is currently trading at 1.3706 CAD against the US Dollar.
