The Canadian dollar is attempting to rebound against its US counterpart in the middle of the trading week after a week-long slump. The loonie had been slipping mostly on investors pouring into the conventional safe-haven asset following last week’s Federal Reserve policy meeting. But the Canadian dollar could have a mixed performance amid stronger energy commodities but disappointing economic figures.
According to Statistics Canada, retail sales tumbled 5.7% in April, down from the 3.6% gain in March. The market had forecast a decline of 5%. This was the first decline in retail trade since January and represented the sharpest loss in exactly a year.
Commerce declined in nine of the 11 subsectors, accounting for three-quarters of retail trade, led by apparel and general merchandise.
On an annualized basis, retail sales soared 56.7% in April.
Next week, the gross domestic product (GDP) reading for April, producer prices for May, and trade numbers will be released. Despite the mixed data, the Bank of Canada (BoC) has stated that it is pleased with the economic recovery so far, with the quantitative easing (QE) program being curtailed. But the central bank will leave its near-zero interest rates unchanged until the second half of next year.
Energy prices are extending their gains midweek. July West Texas Intermediate (WTI) crude oil futures advanced $0.73, or 1.00%, to $73.58 per barrel at 12:47 GMT on Wednesday. July natural gas futures tacked on $0.055, or 1.69%, to $3.313 per million British thermal units (btu).
Since Canada maintains a current account deficit, the economy relies on exports for a considerable portion of its growth. Oil and gas remain the nation’s top shipments, so any change in price can affect the loonie and the broader Canadian economy.
The bond market was mixed on Wednesday, with the benchmark 10-year yield up 0.014% to 1.421%. The one-year bill dipped 0.015% to 0.245%, while the 30-year bond added 0.02% to 1.878%.
The USD/CAD currency pair fell 0.32% to 1.2269, from an opening of 1.2306, at 12:49 GMT on Wednesday. The EUR/CAD dropped 0.27% to 1.4656, from an opening of 1.4698.