USD/CAD jumps to near 1.3750 as Canadian Retail Sales contracts sharply

USD/CAD gains further to near 1.3750 after downbeat Canadian Retail Sales data for May.
Canadian Retail Sales contracted at a faster-than-expected pace, boosting BoC’s subsequent rate-cut prospects.
The US Dollar rises as prospects of Trump’s victory in the US presidential elections improve.

Sagar Dua FXStreet

The USD/CAD pair climbs to near 1.3750 in Friday’s American session. The Loonie asset strengthens as weak Canadian Retail Sales for May add to triggers pointing to subsequent rate cuts by the Bank of Canada (BoC), and the US Dollar (USD) strengthens on expectations that Donald Trump will win the United States (US) presidential elections.

Statistics Canada showed that monthly Retail Sales contracted at a faster pace by 0.8% than estimates of 0.6%. Receipts at retail stores grew by 0.6% in April, downwardly revised from 0.7%. Retail Sales, excluding automobiles, declined sharply by 1.3% from expectations of a 0.5% cut, suggesting poor demand for core goods.

Canadian Retail Sales, a key measure to consumer spendings, indicate that households struggle to bear the consequences of BoC’s higher interest rate. This would open doors for further policy easing, which is an unfavorable scenario for the Canadian Dollar.

Meanwhile, more upside in the US Dollar has also improved the Loonie’s appeal. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps higher to near 104.40. 10-year US Treasury yields rise to 4.24%.

In Friday’s session, investors will focus on the speeches from Federal Reserve (Fed) policymakers: New York Fed Bank President John Williams and Atlanta Fed Bank President Raphael Bostic are lined-up for speech. Investors will focus on cues about when the Fed will start cutting interest rates.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by Statistics Canada on a monthly basis, measures the total value of goods sold by retailers in Canada based on a sampling of retail stores of different types and sizes. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales values in the reference month with the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

EUR/USD turns negative near 1.1850

EUR/USD has given up its earlier intraday gains on Thursday and is now struggling to hold above the 1.1850 area. The US Dollar is finding renewed support from a pick-up in risk aversion, while fresh market chatter suggesting Russia could be considering a return to the US Dollar system is also lending the Greenback an extra boost.

GBP/USD change course, nears 1.3600

GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.