USDCAD Soars on Poor Canadian Data


USDCAD, Daily              

Two key Canadian data points both miss expectations data. Canada retail sales slipped 0.1% in July, contrary to expectations (median +0.2%) and following the 0.1% dip in June. The ex-autos sales aggregate dipped 0.1% in July, also not as expected (median +0.4%) after the revised 0.6% tumble in June (was -0.8%). Excluding gasoline prices, retail sales values grew 0.2% in July. Moreover, falling prices in general were a key driver during July for total sales values, as total sales volumes expanded 0.3% m/m in July. The improvement in actual sales (as opposed to the dollar value of those sales) is consistent with a projection for a 0.2% m/m gain in July GDP after the 0.6% surge in June. The separate real Q3 GDP measure is on track for a 3.2% rebound following the 1.6% drop in Q2.

Also Canadian CPI slowed to a 1.1% y/y rate in August, which was much slower than anticipated (median +1.4%) after expanding at a 1.3% clip in July. Total CPI fell 0.2% m/m in August (median +0.1%) following the matching 0.2% drop in July. The Bank of Canada’s core CPI measure slowed to a 1.8% y/y pace in August (median +2.1%) from the 2.1% y/y growth rate in July. The core CPI was flat in August, matching the flat reading in July.

USDCAD spiked up to 1.3140 highs from 1.3035 following the cooler Canada CPI and softer retail sales outcome. Firmed oil prices weighed on the pairing, though the weaker data more than unwound those CAD gains.

Janne Muta

Chief Market Analyst

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