UK Retail Sales Beat Forecasts in March, Boosted by Warm Weather and Mother’s Day

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

US Dollar        1.3760-1.3980

Euro                 1.5610-1.5830

Sterling            1.8230-1.8460

WTI Oil (opening level) $61.35

The CAD/USD is opening at 1.3874 ( 0.7207 )

The USD/CAD pair moved to near 1.39 during North American trading hours today, as Statistics Canada has reported that inflationary pressures cool down in March.

The headline CPI rose at a slower pace of 2.3%, compared to estimates and the prior release of 2.6%. Month-on-month CPI grew moderately by 0.3% against expectations of 0.7% and the former reading of 1.1%.

Softer Canadian CPI data is expected to jeopardize market expectations that the Bank of Canada will keep interest rates steady at 2.75% in the monetary policy meeting on Wednesday.

This would be the first interest rate meeting of the BoC since June, in which the central bank will keep interest rates on hold.

Investors will also pay close attention to BoC Governor Tiff Macklem’s press conference to get cues about how the tariff policy of United States President Trump will shape the economic and the monetary policy outlook.

Headlines

·    Trump announced plans to impose tariffs on imported pharmaceuticals soon, highlighting that the US does not produce its own drugs. He also reiterated that the EU is taking advantage of the US and emphasized that the EU needs to negotiate, which they are attempting to do.

·    UK retail sales rose by 0.9% in March 2025, exceeding the 0.5% forecast. Unseasonably warm weather and Mother's Day boosted spending on gardening, DIY, food, and health products. Food sales grew by 1.6%, while non-food sales increased by 0.6%.

·    US consumer inflation expectations for the next year rose to 3.6% in March 2025, up from 3.1% in February. Expectations increased for food, medical care, and rent, but decreased for gas, college education, and home prices. Three-year expectations stayed at 3%, while five-year expectations dropped to 2.9%.

·    Treasury Secretary Bessent rejected speculation that foreign nationals are dumping their US Treasury Holdings, instead attributing the recent selloff to deleveraging, saying the Treasury has tools to address dislocation if needed.

Key Points

·    Equities: Tariff exemptions boost US, European stocks; autos, electronics, and banks outperform

·    Volatility: VIX declines significantly; short-term indicators ease but caution persists

·    Digital Assets: Bitcoin and Ethereum rise; MicroStrategy Bitcoin accumulation notable

·    Currencies: USD sideways after choppy session yesterday

·    Fixed Income: US long treasury yields drop back sharply after their recent surge

·    Commodities: Crude stabilising with focus on IEA, Gold holds near record highs