Canadian dollar dips after weaker retail sales

Softer Canadian February and March retail sales numbers highlight the pain from higher interest rates that’s slowly working its way through the economy. Statistics Canada reported sales down 0.1% in February and flat in March.

The market implies roughly a 55% chance of a June 5 Bank of Canada rate cut, rising from just below 50% before the data. The BOC has plenty of time to digest more economic news ahead of that decision, including another retail sales report.

At the moment, USD/CAD is fighting to get above yesterday’s high of 1.3714. So far it has been matched but not broken. A run higher could target 1.3750 but it will depend on the broader risk mood. Currently, US equity futures are up fractionally while Treasury yields are up 4-5 bps across the curve.

This article was written by Adam Button at www.forexlive.com.