THE TAKEAWAY: [Canada retail sales rose less than expected] > [Adds to signs of slowing economy] > [USD/CAD strengthen]
Canadian retail sales increased less than economists forecast due to a decline at department stores and gasoline stations. Ottawa-based Statistics Canada reported today that retail sales rose by 0.1 percent in September, following a gain of 0.3 percent the previous month. Sales excluding autos remained unchanged in September while the gain in last month was revised to 0.5 percent from 0.4 percent. The latest figures fall short of consensus forecasts, as economists surveyed by Bloomberg News had projected growth of 0.5 percent from a month ago, and 0.5 percent excluding autos.
The contraction in household spending was led by sharp declines in receipts at department stores and gasoline stations, which fell 0.2 percent and 0.6 percent respectively. On the other hand, new car dealers reported a 0.1 percent rise in September sales.
Consumers are reacting to the slow growth in job market and tighter rules on mortgage borrowing that Finance Minister Jim Flaherty imposed in July to ease the risk of housing bubble. In addition, based on another Bloomberg survey, Canada’s economic growth rate may remain less than 2 percent through the rest of this year.
USDCAD 1-minute Chart: November 22, 2012
Chart created using Market Scope – Prepared by Renee Mu
The loonie weakened against the U.S. dollar following the release of the retail sales report. At the time this report was written, the Canadian dollar remained weaker, with the USDCAD pair trading at C$0.9975.
--- Written by Renee Mu, DailyFX Research