Investing.com - The U.S. dollar moved higher against the Canadian dollar on Friday as weaker-than-expected Canadian retail sales data was seen as increasing the likelihood for another rate cut by the Bank of Canada.
USD/CAD was up 0.28% to 1.2530 in late trade, and ended the week with gains of 0.6%.
The Canadian dollar weakened after official figures showed that domestic retail sales fell 2.0% in December, far worse than forecasts of a 0.3% decline and the biggest drop since April 2010.
The drop in retail sales came as sales at gasoline stations fell 7.4% in December due to lower gas prices.
The report indicated that the steep fall in oil prices since the second half of 2014 is hurting consumer confidence. A number of Canadian energy firms have announced cutbacks to their capital expenditure programs and some have also begun to lay off staff.
Canada’s central bank cut interest rates by a quarter of a percentage point to 0.75% in a surprise move last month, in response in response to the sharp drop in oil prices.
BoC Governor Stephen Poloz said low oil prices would be negative for growth and underlying inflation when he announced the rate cut.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 94.40 late Friday.
Earlier in the week, the minutes of the Federal Reserve’s January meeting showed that some officials thought that raising rates too soon could weigh on the U.S. economic recovery, and that a deterioration in the global economic outlook could also pose a threat to the recovery.
In the coming week, Tuesday’s testimony by Fed Chair Janet Yellen to the Senate Banking Committee will be closely watched for any indication on when U.S. interest rates may start to rise. Wednesday’s inflation report from the U.S. and Canada will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 23
The U.S. is to publish a report on existing home sales.
Tuesday, February 24
The U.S. is to produce a private sector report on consumer confidence. Meanwhile, Fed Chair Janet Yellen is to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington.
Wednesday, February 25
The U.S. is to release data on new home sales.
Thursday, February 26
Both the U.S. and Canada are to release what will be closely watched reports on the consumer price index. The U.S. is also to release data on initial jobless claims and durable goods orders.
Friday, February 27
The U.S. is to round up the week with revised data on fourth quarter growth, as well as reports on pending home sales, business activity in the Chicago region and consumer sentiment.