Loonie Plummets On Weak Data
Dean Popplewell | May 18, 2018 10:08
Data this morning showed that Canada’s annual inflation rate slowed slightly last month, but remained above the Bank of Canada’s (BoC) 2% inflation threshold for a third consecutive month.
Canada’s CPI rose 2.2% on year-over-year basis in April. Today’s headline print was just shy of the market's expectation of +2.3%. On a month-over-month basis, prices climbed +0.3% in April.
Digging deeper, the BoC’s preferred gauge – average core inflation – rose on a 12-month basis to 2.03%, the highest level in nearly six years.
Canada Retail Sales Climb
Canadian retail sales rose for a third consecutive month in March, beating market expectations.
March retail sales rose 0.6% m/m, on a seasonally adjusted basis to C$50.24B. The consensus was looking for a 0.3% gain. On a price-adjusted, or volume, basis, retail sales increased by a higher 0.8% in March.
Stats Canada also revised both January and February prints a tad higher to 0.3% (+0.1%) and 0.5% (+0.4%), respectively.
Digging deeper, sales rose in six of 11 subsectors, led by a 3.3% advance at new-car dealers. However, ex-autos, retail sales declined 0.2%.
Going forward
Due to higher interest rates and new mortgage financing rules, introduced last January, Canadian households are expected to pare back their spending habits to service their increasing debt loads.
The CAD (C$1.2895) has come under considerable pressure, paring back all of this week’s gains, and about to tackle the psychological C$1.2900-20 level where there is some initial interest to buy the loonie.
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