July US retail sales fell 0.6%, missing forecasts and fueling Fed rate cut bets as the dollar weakens broadly.
The Canadian dollar strengthened to a two-month low near 1.3860 against the US dollar after US retail sales contracted 0.6% in July, far below the 0.1% gain expected. The control group, a GDP input, declined 0.4% following a revised 0.4% increase in June.
The miss marks one of the year’s softer readings, signaling a pullback in US consumer spending. Markets had anticipated a modest rise, but the sharp decline reinforced expectations the Federal Reserve will hold rates steady rather than hike further.
The dollar index slid toward 99.50 after the release, extending losses against major peers. USD/CAD fell below key moving averages, with technical indicators suggesting oversold conditions but no immediate reversal.