On Friday, the Canadian Dollar (CAD) continued to gain strength against the US Dollar (USD) in a five-day streak. The USD/CAD dropped by almost 1.30% this week, and the pair slid below the psychological level of 1.3800, reaching a two-week low. This movement was influenced by mixed Retail Sales data from Canada. Earlier in the day, the Loonie pair was already experiencing pressure due to a generally weak USD, in anticipation of the Retail Sales release. Upon the release of the latest figures by Statistics Canada, it was reported that Retail Sales had risen by 0.8% in March, surpassing the market forecast of 0.7% and showing a strong recovery from February’s downwardly revised decline of -0.5%. However, when excluding auto sales, Retail Sales unexpectedly dropped by -0.7% in March, compared to the 0.6% increase in February.
These figures suggest that consumer spending is generally declining, although it remains resilient overall when auto sales are included. Commenting on the data, senior economist Andrew Grantham from CIBC Capital Markets stated, “It appears that Canadian consumers have not been significantly tightening their spending in the face of tariff uncertainty.” The CAD also received support from the overall weakness of the USD. During the start of American trading hours, the US Dollar Index (DXY), which assesses the value of the USD against six major currencies, fell to a two-week low, trading near 99.40. This fall in the USD reflects the cautious sentiment towards mounting US fiscal risks and global tariff uncertainties. US President Donald Trump recently proposed a 50% tariff on imports from the European Union, starting on June 1, citing stalled negotiations between the two parties. Trump also threatened to impose a 25% tariff on Apple in order to pressure the company into producing their phones in the US.