USD/CAD is flirting with a break of the lows of the year.

The US dollar is sliding broadly today but the Canadian dollar is getting an extra lift from March and April retail sales data. The numbers were solid and come on the heels of a hotter CPI.

Combined, that has the odds of a June 4 rate cut down to 28% from 65% before CPI.

Economists at CIBC were one group calling for cuts and now sound like they’re just waiting for next week’s GDP report to flip.

Our forecast for a contraction in GDP in April and Q2 as a whole is driven more by expected
weakness in manufacturing and other sectors more directly impacted by US trade. Advance figures for those areas are
due to be released early next week, but if they also aren’t as weak as anticipated then we will have to revise our forecast
for monthly GDP and likely our Bank of Canada rate cut call as well.

As for the report itself, they note that consumer spending has been holding up better than anticipated. The caveat is that auto sales were a big driver of stronger retail sales and that could have been a tariff front-run trade.

Watch for stops below the May low of 1.3748.

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