CAD dips after retail sales miss; Still set for weekly gain

Summary:

• Canadian retail sales M/M: +0.1% vs +0.2% exp

• Ex autos M/M: +0.1% vs +0.4% exp

• Loonie dips as USDCAD moves off the lows

Consumer spending in Canada softened in the month of April according to the latest release, with both the headline and core readings for retail sales coming in worse than expected. The month-on-month figure came in at +0.1% against a consensus forecast of +0.2%, with the prior now standing at +1.3%, revised up from +1.1% first time out. When the prior revision is taken into account this is actually similar to what was expected.

A core reading which takes out automobile sales makes for worse viewing however, with a M/M print of +0.1% vs +0.4% expected. There was also a positive revision to the prior here, which is now 10 basis points higher at +1.8% but even when this is considered the data remains a little disappointing. The bigger picture for Canadian retail sales however remains one of general improvement with year-on-year reading of +3.8% for both the headline and the core.

The latest Canadian data was a little disappointing in month-on-month terms but in year-on-year terms the picture remains one of steady improvement. Source: xStation    

There’s been some sizable selling seen in the USDCAD market this week with Wednesday providing the catalyst for the drop, as the Loonie rose after better than expected inflation figures and the greenback declined following the Fed. The pair fell yesterday to its lowest level since February at 1.3150 but has had a bit of a bounce today, aided by this retail sales data. The region from 1.3070-1.3150 could now be seen as a possible support zone but the longer term uptrend that was in place since early last year now appears to be over. Near-term the recovery could extend higher with the 1.3250 level the first area to look for possible swing resistance.

 USDCAD has moved a little higher today but still remains down significantly for the week. 1.3070-1.3150 possible support. 1.3250 potential resistance. Source: xStation