Last week, the Canadian Dollar strengthened against its US counterpart supported by higher Oil prices and stronger than expected domestic retail sales data, which boosted expectations for an interest rate hike in July from the Bank of Canada. Retail sales rose 0.8% in April on higher Gasoline prices and increased demand for home appliances and garden supplies. Moreover, the rebound in Oil prices from a 10-month low helped support the Loonie, but market sentiment remained negative because the global Crude glut has persisted despite OPEC-led output cuts.
Last Friday, Sterling inched slightly higher against the US Dollar as Bank of England policymaker Kristin Forbes said that she feared the Pound’s weakness would have a lasting upward effect on inflation, and that she was concerned that Central Banks were becoming more reluctant to raise rates than in the past. Forbes said that a potential weakening in consumer spending, and the effect of a rate rise on sterling, were concerns for those of her colleagues who did not want to raise rates yet. But she said the fact that the Fed is raising rates should reduce the impact on sterling of a BoE rate rise, as should markets’ currently focus on Brexit talks rather than the monetary policy outlook.
Meanwhile, China’s Yuan softened against the US Dollar and was set for its worst week in more than three months. It has surrendered more than half of the gains it made late last month and in early June. Traders said recent falls in spot Yuan were due to rising seasonal corporate Dollar demand, adding that the undetermined “counter-cyclical factor”, a new measure to calculate the daily reference rate, had not strengthened the midpoint much.