The Canadian Dollar Strengthens as Inflation Concerns Subside

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The Canadian dollar increased incrementally against the US dollar, CAD/USD improving 0.2%. It is expected that the Canadian dollar will strengthen as much as 0.6% by the end of the week.

Even though Canadian inflation has increased by 3.4% this month, investors are not as concerned about inflation for the country as they were in previous months. That is because investors are looking at domestic retail sale data that shows considerable improvement from month to month. The Canadian dollar is approaching a six-year high.

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Retail sales in Canada improved by 3.6% last month, which is well above the 2.3% estimate that Statistics Canada had previously announced. Some parts of Canada were expected to see sales drops of around 5.1% following new COVID-19 restrictions. That hasn’t been the case so far, which is why we are now seeing the Canadian dollar strengthen even though inflation is on the rise.

Canadian Oil and Housing Markets

Canadian gas prices are worth watching, as they have gone up by 62.5% compared to last year. In April of last year, pump prices were at their lowest point in 11 years, and the change seen since then is the largest ever recorded increase for gas prices in Canada. Oil is one of Canada’s top exports, and it is seeing an increase today after three consecutive days of losses.

CAD/USD investors are looking at the housing market in Canada as well, which economic experts says is in such a poor state that it leaves the country exposed to economic shock, partly due to high amounts of household debt. 

Comparing the US Outlook

Meanwhile, over in the US, oil prices are on the rise as well, increasing 1.9%, experiencing a bullish trend and achieving a 6-week high point.

The US dollar plummeted yesterday, finishing at the lowest point is has seen in four months, and performing poorly against a number of major currencies.

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ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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