If you’re like us, you haven’t seen the inside of a retail store in months, and the Canadian dollar took a hit because of it. The Canadian dollar gave up about ½ cent against the US dollar due to weaker-than-expected retail sales in Canada. Retail numbers dropped 0.1% in February compared to the previous month. After the news, markets increased their bet that the Bank of Canada will start cutting interest rates in June to 55%, up from 50% before the report. While this is probably not the straw that breaks the camel’s back, it is yet another indication of a weakening Canadian economy and a depressed Canadian consumer.
After sinking two full cents against the US dollar last week, the Canadian dollar had gained back about half a penny in early Monday morning trading. Global markets in general are taking a breather after a statement from Iran indicated that military action has ‘concluded’. While markets are still expecting an Israeli response, for the time being, it is not a pressing concern.
The Canadian Dollar had another volatile day on Friday. The USD/CAD saw significant gains against the USD on Thursday, touching 1.3480, after Fed Chairman Powell suggested that the Fed still anticipates cutting rates this year despite the strong US economy. Then, on Friday morning, the combination of a spectacular US employment report and a weak Canadian employment report sent the Canadian dollar on a nosedive versus the US Dollar, dropping all the way down to the 1.3640 mark.
Since late December of last year, the Canadian dollar has been trading in a tight range between approximal 1.34 to 1.36 versus the US dollar. The USD/CAD currency pair has attempted numerous times to push past the 1.36 range, but it has failed to do so in a sustained manner. There are a couple of reasons why the USD/CAD pair has been trading in a tight range.