After the publication of Canadian retail sales figures for December, the Canadian dollar appeared to be headed for a day down against the U.S. dollar. While the economists surveyed expected them to have stagnated, retail sales posted a decline of -0.5%. As our economists stressed, the generalization of declines is the greatest disappointment. However, one reading does not make a trend, particularly since some Canadian fundamental factors such as jobs remain relatively strong.
The fall of the loonie was halted by the publication of the minutes of the last meeting of the Federal Reserve (Fed). Many analysts were expecting new information related to the Fed’s opinion on the U.S. administration’s monetary policies. However, this document did not provide any new analysis, but did confirm that the institution and its officials are planning on raising rates “fairly soon.” The likelihood of a rate hike in March did not budge (35%) and the greenback fell slightly against the major currencies.
Few economic indicators of importance are expected on both sides of the border today but we’ll be keeping an eye on the release of comments by two Fed members.
