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19/07/24
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CAD Flat Ahead of Retail Sales and Rate Meeting
On Friday, the Canadian dollar was calm, and USD/CAD traded at about 1.3717, up 0.08% for the day in the European session. There may be stronger movement in the North American session as Canadian retail sales will be released.
Canada’s retail sales are expected to have dropped in June after May’s strong reading. The market estimate is at -0.6% m/m, after May’s gain of 0.7%. In May, retail sales sparkled with an increase of 1.8% annually.
Today, the retail sales report will be the final key release before the Bank of Canada’s meeting on July 24. The BoC is generally expected to reduce interest rates for the second consecutive month after the positive inflation report last week.
Inflation fell to 2.7% y/y in June from 2.9% and CPI dropped by 0.1% on a monthly basis, the first fall since Dec. last year. Core CPI also dropped slightly.
The BoC has already shown that it is willing to cut rates as both core and headline inflation are within the target range of between 1% and 3%. Businesses and households want more relief from high interest rates and the central bank has to continue cutting rates to avoid a recession.
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