USD/CAD: Canadian Dollar Steady Ahead of Retail Sales

12/20/2024

1 minute read

2024.12.20 12:19

The is showing limited movement on Friday. In the European session, The pair is trading at 1.4384, down 0.11% at the time of writing. On Thursday, the Canadian dollar fell to its lowest level since March, touching 1.4435.

Canada’s Retail Sales Expected to Improve

Canada retail sales have risen for four consecutive months and the trend is expected to continue today, with a market estimate of 0.7% m/m.

The economic outlook remains gloomy and the Bank of Canada is expected to continue lowering rates in order to boost the weak economy. The BoC has been aggressive, cutting rates five times since June for a total of 175 basis points. The central bank slashed the benchmark rate by 50 basis points to 3.25% last week but signaled that it plans a “more gradual approach to monetary policy”, which means we can expect 25-bp increments in rate cuts if there are no surprises in inflation or employment data.

The “gradual approach” sounds a lot like what we’re hearing from the Federal Reserve, which surprised the markets on Wednesday when it lowered its forecast to just two rate cuts in 2025, compared to four cuts in the September projection. The soared after the rate announcement and the Canadian dollar took it on the chin with losses of around 1% on Wednesday.

The incoming Trump administration could be a major headache for Canada, as Trump has pledged to slap tariffs on Canadian products. The Canadian government has announced enhanced security measures at its border with the US, hoping these moves will encourage Trump to suspend his tariff plans. Canada’s Finance Minister Chrystia Freeland resigned earlier this month after a bitter row with Prime Minister Trudeau, which has added political uncertainty that could weigh on the wobbly Canadian dollar. USD/CAD-4-Hr Chart