USD/CAD depreciates as Canada’s hot retail sales and inflation data increase the likelihood of a BoC’s steady stance in June.
The US Dollar extends its losses amid growing US-debt concerns.
The US deficit could increase by $3.8 billion if Trump's “One Big Beautiful Bill” passes through the Senate floor.
USD/CAD continues its losing streak that began on May 19, trading around 1.3710 during the early European hours on Monday. The Canadian Dollar (CAD) appreciates against the US Dollar (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 (US) and Canada.
The stronger retail sales data, along with April’s hot inflation data, raised the expectations of the Bank of Canada (BoC) 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 and undermined the USD/CAD pair.
Additionally, the US Dollar struggles amid rising uncertainty surrounding the US economy. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is extending its losses and trading around 98.90.
During the week, Trump's “One Big Beautiful Bill” will go through the Senate floor after the Memorial Day holiday on Monday. The Congressional Budget Office (CBO) noted that Trump’s bill is expected to increase the deficit by $3.8 billion, as it would deliver tax breaks on tip income and US-manufactured car loans.
On Sunday, US Senator Ron Johnson said on CNN, "I think we have enough votes to stop the process until the President gets serious about spending reduction and reducing the deficit.” Johnson added, “My primary focus now is spending. This is completely unacceptable. Current projections are a $2.2 trillion per year deficit.”
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