- US and UK markets are closed on Monday
- Canada Retail Sales data for March on tap-forecast 0.7% m/m (vs -0.4% previously)
- US dollar extends losses in pre-long weekend trading.
USDCAD: open 1.3805, overnight range 1.3804-1.3866, close 1.3858, WTI 61.16, Gold 3328.83
The Canadian dollar is attempting to extend this week’s gains as traders focus on the upcoming US budget debate in the Senate. Trump’s "cut rates, spend big" bill is being reviewed and so far bond traders are not impressed as they have lifted the U.S. 10-year yield back to 4.55%, a level not seen since the beginning of the year.
The budget debate has weighed on the US dollar and the Canadian dollar caught a bid because traders were unloading US dollars across the board. However, the Canadian dollar rally may run out of steam, thanks to Bank of Canada Governor Mr. Macklem’s downbeat economic assessment. He said that the second quarter is likely to be soft and cautioned that ongoing tariff turmoil could drag third-quarter growth even lower.
Today, Canada’s March retail sales report is forecast to show a 0.7% monthly increase, though sales excluding autos are expected to be flat. The numbers will likely be skewed by panic buying ahead of Trump’s incoming tariffs, muddying the picture.
WTI prices spent the week ranging between 60.57 and 61.33, pausing the recent slide. The greenback’s pullback provided some lift, but lingering fears of another OPEC supply bump—and a glut made worse by Trump’s tariff theatrics—are capping upside momentum.
Equity markets were aimless. Wall Street barely moved, while Asia eked out modest gains. Japan’s Topix rose 0.68%, and Australia’s ASX 200 added 0.15%. European stocks are wobbling without direction—the CAC-40 slipped 0.39%, while the DAX nudged up 0.15%. S&P 500 futures are flat.
EURUSD traded in a 1.1279–1.1357 range and found buyers as U.S. budget dysfunction and rising Treasury yields sent investors scrambling for alternatives. A surprise jump in German Q1 GDP to 0.4% q/q added some lift, reinforcing support. Euro bulls, however, appear indifferent to the latest tariff threat from Washington. Meanwhile, the Americans are rattling their tariff sabers again. Reuters reports that U.S. negotiators are telling the EU to slash tariffs or face another 20% increase.
GBPUSD climbed in a 1.3414–1.3502 band and extended gains after upbeat April retail sales data, which rose 1.2% m/m, more than expected.
USDJPY traded negatively in a 143.15–144.18 range. Prices sank after Japan’s April CPI ex Fresh Food surged to 3.5% y/y, which raised the odds for a 25 bp rate hike at the next BoJ policy meeting.
AUDUSD bounced between 0.6408 and 0.6463 as the greenback wilted under deficit worries and political noise out of Washington. The Aussie’s upside could be capped by the RBA’s dovish tone, which Governor Bowman reinforced earlier this week.
US New Home Sales and a trio of Fed policymakers are on tap.
