Canada Retail Sales Report:
- Canadian retail sales for April grew 0.9% month-on-month, ten percent more than forecast
- Strong consumer spending indicates that consumption remains resilient despite rising inflation
- The Canadian dollar extended gains against the US dollar after surprising retail sales data to the upside
Most Read: Canadian Dollar Forecast – Has Canadian Dollar Weakness Started Its Course? CAD/JPY, USD/CAD settings
This morning Statistics Canada released its latest retail survey. According to the agency, April retail sales grew 0.9% month over month, slightly above expectations for a 0.8% increase, easing concerns that escalating price pressures and lower real incomes are impacting spending.
Looking at the drivers, the report showed that purchases grew in 6 of the 11 sub-sectors, But the biggest gains came of general merchandise stores, which jumped 4.2% month over month. Separately, in its advance estimate, the agency said retail sales for the month of May likely rose 1.6%, although it cautioned that the number would be revised as more information is gathered.
The value of April’s total purchases, along with preliminary results for May, suggest that Canadian Economie preserved Momentum at the start of the second quarter Central consumer flexibility, a good sign for Gross Domestic Product and Economic Forecasts.
The Canadian dollar extended its daily advance against the US dollar after the retail sales report, but moves were limited as traders were more concerned about the inflation report on Wednesday (USD/CAD down from 1.2947 to 1.2939). The CPI for May is expected to rise 1% month over month, bringing the annual reading to 7.4%, a new high in three decades.
The strength in household consumption, combined with extremely high inflation, can lead to Bank of Canada To continue to tighten monetary policy strongly during the coming months in its efforts to restore price stability, a scenario that would support the “Canadian dollar”. However, the The speed and magnitude of future price hikes It could change if the inflation profile deteriorates further. We should have a more accurate and accurate picture of how inflationary forces will develop in the broader economy tomorrow once the May results are announced.
USD/CAD 3 minute chart
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— By Diego Coleman, Market Strategist, DailyFX