TORONTO, June 20 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday as domestic retail sales data added to recent evidence of an economic slowdown.
Retail sales were up 0.3% in April on a monthly basis as the momentum seen in the previous months when customers brought forward purchases to beat the impact of tariffs continued, but a preliminary estimate showed that the number is likely to contract by 1.1% in May.
"Canadian consumers continued to spend in April, but a decline in the May advance estimate for retail sales provides another indication that the economy is heading for a stall in Q2," Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note.
"That renewed consumer caution amid tariff uncertainty and a weakening labour market is likely to persist for a little while yet, and we continue to expect two more 25 bp (basis point) interest rate cuts by the Bank of Canada in the second half of the year to help support a recovery."
The loonie was trading 0.2% lower at 1.3730 per U.S. dollar, or 72.83 U.S. cents, after trading in a range of 1.3688 to 1.3739. On Thursday, the currency touched a near three-week low at 1.3746, and was on track for a weekly decline of 1.1%.
Some positives for the currency, such as the prospect of a speedy economic deal between Canada and the United States, have been offset by recent safe-haven demand for the U.S. dollar.
"Heightened geo-political tensions may persist for now, with the potential of US involvement in the Israel/Iran confrontation dangling over markets for the next couple of weeks," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.
U.S. crude futures were trading 0.2% lower at $74.95 a barrel after the White House delayed a decision on U.S. involvement in the Middle East conflict, but remained on course for a third consecutive weekly rise. Oil is one of Canada's major exports.
Canadian bond yields eased across the curve, with the 10-year down 2 basis points at 3.315%.
Reporting by Fergal Smith in Toronto; Editing by Nia Williams
