Canada goes shopping

Statistics Canada said that retail sales increased for the second consecutive month, rising 1.1% to $51.3 billion in March. Sales were higher in seven of 11 subsectors, representing 39% of retail trade. USDCAD dropped from 1.3396 to 1.3359 on the news. Unfortunately, the bulk of the shopping was done at gas pumps and the post data dollar sellers became dollar buyers lifting USDCAD back to 1.3389 (as of 1400 GMT) and unchanged since New York opened.

Nevertheless, the retail sales report was robust and supported the Bank of Canada view that earlier economic weakness was merely a “soft patch,” in part due to weak oil prices. They expect economic growth to pick up in Q2. Today’s data combined with the steady inflation and robust unemployment reports suggest next weeks Bank of Canada monetary policy statement could be a tad hawkish.

The intraday USDCAD technicals are bearish below 1.3410, with the break of support at 1.3370 targeting further losses to 1.3320. However, US/China, US/Iran tensions, Brexit, and EU elections limit USDCAD downside as a stampede into safe-haven trades is only a headline away.