The Canadian dollar dropped in response to Friday morning’s announcement that the Canadian inflation is falling. Consumers paid 2.9% more in May than they did in May 2002 for the goods and services included in the Consumer Price Index basket. But excluding higher energy prices, the CPI was 2.7% for the second month in a row, after rising 3.2% in March.

StasCan is also reporting that most commodity groups posted gains in April, except clothing, footwear and accessories, and hardware and lawn and garden products. Overall sales for the group of large retailers amounted to $6.9 billion, up 6.1% from April 2002.

But sales of clothing, footwear and accessories posted their largest year-over-year sales decrease in more than five years in April, with sales slumping 5.3% from April 2002. This follows two consecutive months of flat year-over-year sales.

Meanwhile, wholesale sales fell sharply in April, down 1.1%, with $35.9 billion in goods and services sold during the month. This was the third consecutive monthly decline and the sharpest recorded since September 2001.

This combination of reports has analysts speculating that the Bank of Canada — contrary to recent speeches by bank governor David Dodge — will be forced into lowering interest rates.

Speculation is rife in the U.S. that the Federal Reserve is apparently ready to cut interest rates next week, possibly by a quarter-point.

Despite this economic malaise, Wall Street futures are pointing toward a positive start for North American equity markets.

In Europe, the bourses are up. London’s FTSE 100 index is up 0.63% at midday. Frankfurt’s DAX has gained 0.38%. Paris’s CAC 40 is up 0.69%.

In Asia, markets finished Friday trading mixed. Tokyo’s Nikkei gained 9.88 points, or 0.11%, to 9,120.39. The Nikkei gained about 280 points this week.

In Hong Kong, the Hang Seng Index fell 49.8 points, or 0.5%, to 9,930.31. Investors seem to have taken the lead from two down days on Wall Street.