USD/CAD remains calm above 1.3700 despite weak Canadian Retail Sales
- USD/CAD didn’t move as expected despite the release of the Canadian Retail Sales and the US Durable Goods Orders data.
- The Canadian Retail Sales contracted by 0.2% in March on a month-on-month basis.
- US Durable Goods Orders surprisingly rose by 0.8% in April.
The USD/CAD pair remains unchanged above the crucial support of 1.3700 even though Canadian Retail Sales were weaker-than-expected in March and United States Durable Goods Orders for April beats estimates.
Canadian Retail Sales were down by 0.2% while investors forecasted them to have remained stagnant. In February, Retail Sales also contracted by 0.1%. Sales data excluding automobiles surprisingly declined by 0.6% as economists expected them to rise by 0.1%.
Retail Sales data indicate the current status of consumer spending, which accounts for a major part of economic growth. Significant decline in sales at retail stores indicates households are struggling to bear the consequences of higher interest rates by the Bank of Canada (BoE). This would strengthen the speculation that the BoC will start reducing interest rates from the June meeting.
Meanwhile, the market sentiment is upbeat though Federal Reserve (Fed) policymakers continue to maintain a hawkish guidance on interest rates. Considering positive overnight futures, the S&P 500 is expected to open on a positive note. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to 104.77.
The United States (US) Census Bureau has reported that Durable Goods Orders surprisingly rose by 0.7% while investors expected them to decline by 0.8%. The Durable Goods Orders data is a leading indicator of core Consumer Price Index (CPI) and higher demand for durable goods suggest a stubborn inflation outlook.