CAD Plummets On Disappointing Retail Sales And Weak Inflation

Canadian inflation slowed significantly last month as temporary factors that lifted the cost of gas and air travel dissipated.

Canada’s 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 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.

USD/CAD for Oct. 18-19, 2018.

USD/CAD for Oct. 18-19, 2018.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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