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24/05/24
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CAD Flat Ahead of Retail Sales
On Friday, the Canadian dollar was unchanged, and USD/CAD traded at about 1.3726 in the European session.
Canadian retail sales will be released later in the day, which may lead to some volatility in the North American session. The US will release consumer confidence and durable goods data.
Canadian consumers have reduced their spending, as retail sales so far this year have been flat. Much of the same is likely in the March release, and the market estimate stands at 0%.
The Bank of Canada will watch today’s report carefully, and it will meet again on June 5. The BoC has kept rates at 5% for 6 consecutive times, and consumers are hoping for some rate cuts as they are still squeezed by the high cost of inflation and elevated rates.
This week’s positive inflation release seems to provide the support that the BoC requires to cut rates, as CPI dropped to 2.7% in April from 2.9%.
Inflation is not at the 2% target yet but both the core and headline rates have dropped to lower than 3%, which is within the BoC’s “comfort level” of between 1% and 3%. The downward inflation trend strongly supports an initial rate cut in either Jun or Jul.
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