The Canadian dollar is showing slight gains in the Friday session. Currently, USD/CAD is trading at 1.3279, down 0.28% on the day. On the release front, Canada will publish key consumer data. CPI, the primary gauge of consumer spending, is expected to edge up to 0.4%. The markets are expecting mixed signals from retail sales reports. Core retail sales are expected to rebound to 0.5%, but retail sales is forecast to slip to 0.0%. There are no major events in the U.S.
The Canadian dollar is struggling, and June is likely to be the currency’s worst month since February. USD/CAD has gained 2.5% this month, as fears of a global trade war have soured investor appetite for minor currencies like the Canadian dollar. Canada is particularly vulnerable to protectionist moves by the United States, as some 80% of Canadian exports go to the U.S. A tight trading relationship between Canada and the U.S, anchored by the NAFTA agreement, hasn’t prevented President Trump from imposing tariffs on Canadian steel and aluminum. With the NAFTA talks showing little sign of progress, Trump has threatened to impose tariffs of 25 percent on Canadian-built vehicles. Such a move would be disastrous for the Canadian automotive sector, which is worth some C$80 billion to the economy every year. The Trudeau government has promised to help sectors hit with US tariffs, but bailing out the auto industry would cost billions. Canada may have to provide the U.S with more concessions in the NAFTA negotiations, in order to stave off tariffs against Canadian vehicles, which could have a disastrous effect on economic growth.
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