Summary:
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Canadian core retail sales rise more than forecast
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Latest core inflation figures also rise
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USDCAD holds key support at 1.2885
The Canadian dollar has received a short term boost this afternoon with the latest consumer spending figures beating forecasts sending the Loonie higher against most of its peers, although these initial gains were since pared somewhat. In M/M terms the headline retail sales figure rose by 0.3% as expected, marking a comeback from the 0.2% drop last time out. But it was the core figure which delivered the best bit of news with a rise of 0.9% M/M above the 0.6% expected and further above the -0.1% seen last time out. There could be some seasonality at play here however, with the year-on-year figures not looking quite so positive and the core reading here is substantially below the headline.
The bigger picture for Canadian retail sales isn’t so good however, with the core reading opening up a notable divergence with the headline. The former is also close to its lowest level in several years. Source: XTB Macrobond
At the same time as the retail sales data was released we also got the most recent inflation figures with the overall picture a little positive for CAD. . In Y/Y terms the CPI fell to 2.8% as expected after the prior reading showed a huge jump of 3.0% - the largest since 2011. The core figures were all marginal beats with the common, median and trimmed beating by 0.1% to come in at 2.0%, 2.1% and 2.2% respectively.
Headline inflation pulled back from a 7-year high in the last month but the average of the 3 core measures increased again and in now above the 2.0% mid-point of the inflation target. Source: XTB Macrobond
USDCAD has respected the 1.2885 level once more despite the slightly positive Canadian data. This could now be viewed as key support. Source: xStation
