CAD Gains on Strong Retail Data as Tariff Tensions Simmer

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

US Dollar        1.3600-1.3840

Euro                 1.5500-1.5730

Sterling            1.8500-1.8720

WTI Oil (opening level) $61.40

The CAD/USD is opening at 1.3717 ( 0.7290 )

USD/CAD continues its streak that began a week ago, trading around 1.3700 during the early European hours on Monday. The Canadian Dollar appreciates against the USD as domestic retail sales rose for a second straight month in April, indicating strength in consumer sentiment despite an aggressive trade war between the United States and Canada.

The stronger retail sales data, along with April’s hot inflation data, raised the expectations of the Bank of Canada to hold interest rates in the upcoming June meeting instead of another 25 basis points rate cut. This has provided support for the Canadian Dollar

Headlines

·    Trump postponed the 50% tariff on the EU to July 9 after a call with European Commission President Ursula von der Leyen, who described the conversation as a "good call" and emphasized the need for more time to "reach a good deal."

·    Sales of new single-family homes in the US rose by 10.9% to 743,000 units in April, exceeding expectations of 692,000. This marks the largest increase since August 2022 and the highest sales since February 2022, driven by builder incentives despite rising mortgage rates.

·    Canadian retail sales likely increased by 0.5% in April 2025, after a revised 0.8% rise in March to C$69.8 billion, marking the year's highest growth. Six of nine subsectors, led by motor vehicles and parts, showed gains despite US tariffs and Ottawa's retaliation.

·    Trump said he was “absolutely” considering new sanctions against Russia after Moscow launched missile and drone strikes across Ukraine. Saying that Putin “has gone absolutely CRAZY” and not happy about seeing the “killing a lot of people” continuing.

Key Points

·    Equities: Tariff drama; tech and EU under pressure; futures rebound on deadline extension

·    Volatility: VIX jumps; near-term risk persists; mega-cap earnings ahead

·    Digital assets: Bitcoin holds near highs; IBIT inflows strong; crypto stocks consolidate

·    Fixed Income: European yields likely set to reverse Friday’s drop on Trump tariff delay

·    Currencies: USD and JPY weakest as Euro and AUD surge overnight.

·    Commodities: Gold lower, crude up as Trump postpone raised tariff on the EU