The Canadian dollar remained steady on Friday, trading at 1.3726 during the European session. Canada is set to release its retail sales data later in the day, which could bring some volatility to the North American session. Meanwhile, the US will also unveil durable goods and consumer confidence figures.
Canada’s retail sales have been stagnant in 2024, with expectations that March will follow suit with a 0% change. This trend is closely monitored by the Bank of Canada, which has maintained its interest rates at 5% for six consecutive meetings. Consumers are hopeful for a rate cut to ease the financial strain caused by high rates and inflation.
The recent dip in inflation, from 2.9% to 2.7% in April, could pave the way for a rate cut by the BoC in either June or July. Despite inflation not yet reaching the 2% target, the central bank’s comfort level of 1-3% has been met with the decline in both headline and core rates.
In the US, positive news came from services PMI, which rose to 54.8 in May, indicating improved business activity despite the high interest rates. Manufacturing also showed growth, with the PMI climbing from 50.0 to 50.9. The USD/CAD technical analysis suggests weak support at 1.3710, with resistance levels at 1.3763 and 1.3797.
Overall, the economic outlook for both Canada and the US remains cautiously optimistic, with potential shifts in monetary policy on the horizon.