NY Open: Loonie lower on weak Canadian retail
FX Trader, Loonieviews.net
Summary: A sharper-than-expected downtown in Canadian Retail Sales hit the loonie where it hurts today, sending USDCAD to the 1.3019 area.
Shoppers weren’t shopping, and inflation wasn’t inflating. That sums up this morning Canadian Retail Sales and CPI reports and explains the surge in USDCAD from 1.3015 to 1.3019. The data was expected to be slightly weaker than last month’s results, but today’s numbers were well beyond the most pessimistic forecasts; August Retail Sales fell 0.1% (forecast 0.3%) and September CPI fell 0.4%. (forecast 0.0%)
Nevertheless, Canada’s 2.2% annual rate of inflation is still above the Bank of Canada target, and the BoC will still raise interest rates by 0.25% next Thursday.
The US dollar is closing the week on a firm note, posting a 1.29% gain against sterling and nearly 1.0% against the euro. The antipodean currencies outperformed, led by a 1.21% rally in the New Zealand dollar.
The cash register might be ringing up “NO SALE” in Canada, but the cash drawer is overflowing on Wall Street. American Express Company (AMX: NYSE) reported better than expected quarterly profits after the close yesterday, as did PayPal (PYPL: Nasdaq) This morning, Proctor and Gamble (PG: NYSE) and Honeywell beat profit estimates which have put the major US indices in positive territory at the open.
The week ahead has the European Central Bank and BoC policy meetings along with US Q2 GDP data. Eurozone PPI data are released on Wednesday.
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