Loonie Holds Ground as US Retail Sales Disappoint

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.4170-1.4400

Euro                 1.5500-1.5720

Sterling            1.8440-1.8660

WTI Oil (opening level) $68.35

The CAD/USD is opening at 1.4287 ( 0.6999 )

The USD/CAD trades close to 1.4300 level, (not breaking 0.7000 or 1.4285 with any conviction) holding onto familiar levels yet pulling down from the high of year of 1.4792.

The 100 moving average is 1.4220.

Statistics Canada will release the February inflation report on Tuesday, as estimated by the Consumer Price Index. Annualised inflation is expected to have ticked higher, from the 1.9% posted in January to 2.1%. The foreseen uptick is far from worrisome but could have a negative impact on CAD in the near term.

Headlines

·    US retail sales rose 0.2% in February 2025, recovering from a 1.2% decline in January but below the expected 0.6% rise. Seven categories saw declines, including food services (-1.5%) and gasoline stations (-1%). Non-store retailers led growth with a 2.4% increase.

·    The NAHB/Wells Fargo Housing Market Index in the US, a measure of builder confidence in the market for newly built single-family homes, fell to 39 in March 2025, the lowest in seven months, down from 42 in February and below the forecast of 42. Current sales conditions dropped to 43, while buyer traffic decreased to 24. Builders face high material costs, tariff issues, and supply challenges like labour and lot shortages.

·    The US NY Empire State Manufacturing Index fell to -20.0 in March 2025, the lowest since May 2023, below the expected -0.75. New orders and shipments fell, while inventories reached a two-year high. Employment and hours worked declined slightly, and input prices rose sharply.

·    Trump and Putin will speak together today about ending the fighting in Ukraine, with a 30-day ceasefire being a key objective. However, an ongoing discussion on how to divide "assets" in Ukraine has sparked concerns among Ukrainian and European officials that Trump may offer concessions to Russia without Ukraine's consent, potentially weakening Ukraine's position and security.

Key Points

·    Equities: Stocks extend gains; tech struggles; Fed meeting in focus; German debt vote; AI hype fuels China rally

·    Volatility: VIX at 20.51; uncertainty lingers; Fed policy and tariffs remain key risks

·    Digital Assets: Bitcoin -1.8%, but ETF inflows hit six-week high; Coinbase rises; SEC hearing looms

·    Currencies: JPY crosses squeezed ahead of BoJ tonight, NOK rallied sharply

·    Fixed Income: German Bund yields drop ahead of today’s Bundestag vote on huge fiscal package

·    Commodities: Gold and crude rise on renewed Mideast tensions