Mon, Jun 05, 2023 @ 16:58 GMT
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Canadian Dollar Ignores Weak US Job Report, Canadian CPI Ahead

USD/CAD has edged lower in the Thursday session. Early in the North American session, the pair is trading at 1.3320. On the release front, there are no Canadian economic indicators. In the US, unemployment claims jumped to a 7-week high, rising to 258 thousand. This was well above the forecast of 258 thousand. Later in the day, New Home Sales is expected to improve to 566 thousand. Federal Reserve Chair Janet Yellen will speak at an event in Washington, and FOMC members Neel Kashkari and Robert Kaplan will also deliver speeches on Thursday. On Friday, Canada publishes CPI, one of the most important economic indicators. CPI was unexpectedly high in January, at 0.9%. The February report is expected to slip to 0.2%.

Canada’s retail sales were stellar in January, indicative of a strong increase in consumer spending. Core Retail Sales jumped 1.7%, beating the forecast of 1.3%. This marked the strongest gain since February 2015. Retail Sales sparkled with a gain of 2.2%, compared to an estimate of 1.3%. The strong figures point to a strong first quarter for the economy, and weak retail sales data in December appear to be a seasonal distortion. However, the Canadian dollar was unable to take advantage and couldn’t gain ground against the greenback.

With a dearth of economic releases this week, the markets have been focusing on speeches from FOMC members. Earlier this week, Chicago Fed President Charles Evans said he expected the Fed to raise rates two more times this year. This projection was in line with the Fed’s dot plot (which remain unchanged) as well as last week’s rate statement. Although one could make a strong case that three rate hikes in 2017 would be impressive, the markets appear disappointed, and would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach has soured sentiment towards the greenback, resulting in the dollar heading lower against its major rivals.

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