CAD Plummets On Disappointing Retail Sales And Weak Inflation
Dean Popplewell | Oct 19, 2018 09:47
Canadian inflation slowed significantly last month as temporary factors that lifted the cost of gas and air travel dissipated.
Canada’s CPI climbed 2.2% y/y, following a 2.8% increase in August and a 3% climb in July.
The market was looking for a solid 2.7% gain in September.
On a month-over-month basis, CPI declined 0.4%.
Digging deeper, the Bank of Canada's three preferred measures supporting inflation also weakened – core-inflation prices rose in a range from 1.9% to 2.1% for an average of 2.0%, down from the previous month’s 2.1% average.
Despite this morning miss, the headline annual inflation rate in Canada has come in 2%+ for eight consecutive month.
Canada retail sales miss
Canadian retail sales fell unexpectedly in August, led mostly by gas stations receipts declines.
Canada retail sales fell 0.1% in August, m/m, to a seasonally adjusted C$50.76B. The market was looking for a 0.3% rise.
In volume terms, retail sales declined by a steeper 0.3% in August.
The previous month’s data were revised downward, and indicated receipts rose 0.2% vs. 0.3% estimate.
On a 12-month basis, retail sales rose 3.6% on a nominal basis and 0.7% in volume terms.
On the release, the CAD came under immense, trading at C$1.3030 before the headlines to C$1.3116.
Next up, the BoC monetary policy announcement is next Wednesday, Oct. 24. Despite a weaker retail sales and inflation, the market is currently pricing in another 25 bps hike by Governor Stephen Poloz. The OIS mkt still at 97% that they hike.
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