In Friday’s New York session, the USD/CAD pair continues to slide, reaching near 1.3580. This decline comes as the Canadian dollar weakens following Statistics Canada’s report of a 0.3% contraction in monthly Retail Sales for June, in line with expectations.
The decrease in Retail Sales was primarily driven by weak demand for automobiles, with sales excluding autos unexpectedly rising by 0.3%. Economists had anticipated a 0.2% decline, indicating that consumers may be delaying purchases of high-ticket items to avoid higher interest payments. This could lead to expectations of further interest rate cuts by the Bank of Canada (BoC).
On the global front, market sentiment remains positive for riskier assets, as evidenced by significant gains in S&P 500 futures during the early American session. The US Dollar Index (DXY), which measures the Greenback against six major currencies, also edges lower to near 101.40.
The key event to watch for the Canadian dollar will be Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium at 14:00 GMT. Powell is expected to provide insights on interest rates and the US economic outlook.
Analysts anticipate that Powell will not outline a specific path for rate cuts but may indicate a shift towards policy normalization in September. Investors will be looking for clues on the size of potential rate cuts next month.
Economic Indicator: Retail Sales ex Autos (MoM)
The Retail Sales ex Auto data, released by Statistics Canada monthly, measures the total value of goods sold by retailers in Canada excluding motor vehicles and parts. Changes in Retail Sales are closely monitored as an indicator of consumer spending, with higher readings seen as bullish for the Canadian Dollar (CAD) and lower readings as bearish.
Last Release: Fri Aug 23, 2024 12:30
Frequency: Monthly
Actual: 0.3%
Consensus: -0.2%
Previous: -1.3%
Overall, the USD/CAD pair is facing downward pressure due to weak retail sales in Canada and market expectations regarding the Federal Reserve’s monetary policy. Investors should pay close attention to Powell’s speech for potential insights into future rate cuts and their impact on the currency market.
