USD / CAD - Canadian dollar awaiting retail sales
- Canada retail sales expected to rise just 0.4% compared to 0.8% in March.
- Risk sentiment improves as Trump delays intervening in Iran/Israel war
- US dollar gives back some gains in overnight trading.
USDCAD: open 1.3696, overnight range 1.3688-1.3719, close 1.3700, WTI 73.77, Gold 3356.11
The Canadian dollar drifted aimlessly overnight. Global risk sentiment received a mild boost after Trump signaled that he would hold off on direct military involvement in the Israel-Iran conflict for two weeks. Markets are likely to stay cautious heading into the weekend on the chance Trump walks back his pause.
Prime Minister Carney is preparing a retaliatory move against the latest round of US tariffs, planning to mirror the 50% duty imposed on Canadian steel and aluminum. Additionally, Canada will raise tariffs to 100% on imports from countries lacking a formal trade agreement.
Canada’s April retail sales are projected to rise by 0.4% on the month, following a 0.8% increase in March. The ex-autos figure is expected to post a 0.2% gain after a 0.7% drop in the prior report. Canada also releases new housing price data and raw material price index.
Stateside, the Philadelphia Fed Manufacturing Index is expected at -1, a modest improvement from the previous reading of -4.
WTI oil retreated to 73.86 from 74.29 after reports that Trump has postponed any military action against Iran.
Gold (XAUUSD) dipped to 3340.48 before recovering to 3356.37 in early New York dealings. The metal has shed 94.27 since Monday’s high, pressured by profit-taking and muted fears of broader escalation in the Middle East conflict.
Asian equities traded on a softer note, with no guidance from Wall Street due to the Juneteenth holiday. Japan’s Topix lost 0.75%, Australia’s ASX 200 declined 0.21%, while Hong Kong's Hang Seng gained 1.26% amid localized optimism.
In Europe, equity markets are slightly firmer following Trump’s delay in escalating military action. The DAX is ahead by 0.88%, the CAC 40 has risen 0.51%, and the FTSE 100 is up 0.43%. S&P 500 futures are off by 0.25%, partly reflecting concerns about the Fed's more hawkish lean. The US 10-year yield is at 4.414%.
EURUSD climbed from 1.1490 to 1.1535 as traders embraced a modest recovery in risk appetite. Germany’s producer prices came in marginally better than forecast but still signaled underlying weakness. Geopolitical concerns continue to loom.
GBPUSD drifted higher from 1.3493 to 1.3501 during the overnight session. The move came despite the Bank of England's policy announcement being largely ignored and disappointing UK retail sales, which dropped 1.3% in May against expectations for a 1.7% rise.
USDJPY moved within a 145.13–145.57 band, buoyed by the improvement in risk sentiment. Gains were limited after Japan’s core inflation ticked up to 3.7% in May from 3.5% previously.
AUDUSD held steady in a 0.6463–0.6495 range, underpinned by the global shift toward risk. NZDUSD was inactive due to a domestic holiday. Both currency pairs are sensitive to evolving US policy signals and any developments in the Iran situation.
