(MENAFN- DailyFX)
CANADA RETAIL SALES REPORT:
- Canada's April retail sales grow 0.9% month-over-month, one tenth of a percent above expectations
- Strong consumer spending suggests that consumption remains resilient despite soaring inflation
- Canadian dollar extends gains against the U.S. dollar after the retail sales data surprise to the upside
Trade Smarter - Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
Subscribe to Newsletter
Most Read: Canadian Dollar Forecast - Has Loonie Weakness Run its Course? Setups for CAD/JPY, USD/CAD
Statistics Canada released this morning its latest retail trade survey. According to the agency, April retail sales grew 0.9% on a monthly basis, slightly above expectations of a 0.8% increase, easing worries that mounting price pressures and falling real incomes are denting spending.
Looking at the drivers, the report showed that purchases grew in 6 of 11 subsectors, but the biggest gains came from general merchandise stores, which jumped 4.2% month-over-month. Separately, in its advance estimate, the agency said May retail sales likely rose 1.6%, although it cautioned that the figure will be revised when more information is gathered.
The value of April's overall purchases, along with preliminary results for May, suggests that the Canadian economy maintained momentum at the start of the second quarter amid consumer resilience, a good sign for gross domestic product and the economic outlook.
The Canadian dollar extended its daily advance against the U.S. dollar following the retail sales report, but moves were limited as traders are more concerned about Wednesday's inflation report (USD/CAD moved down from 1.2947 to 1.2939). Expectations are for May CPI to rise 1% month-over-month, bringing the annual reading to 7.4%, a new three-decade high.
The strength in household consumption, coupled with sky-high inflation, could lead the Bank of Canada to continue to tighten monetary policy aggressively in the coming months in its effort to restore price stability, a scenario that would support the 'Loonie'. However, the speed and magnitude of future rate hikes could change if the inflation profile deteriorates further. We should have a more nuanced and accurate picture of how inflationary forces are evolving in the broader economy tomorrow once May's results are released.
USD/CAD 3-MINUTE CHART
Source: TradingView
EDUCATION TOOLS FOR TRADERS
- Are you just getting started? Download the beginners' guide for FX traders
- Would you like to know more about your trading personality? Take the DailyFX quiz and find out
- IG's client positioning data provides valuable information on market sentiment. Get your free guide on how to use this powerful trading indicator here.
---Written by Diego Colman, Market Strategist for DailyFX
MENAFN21062022000076011015ID1104409791
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.