Canadian Retail Sales On Wednesday May Be The First Wake-Up Call

Even if retail sales grow 4.0% in February, it will still be below November value. It suggests that retail sales are lagging at the rate of inflation. To catch up with inflation and confirm consumer activity growth, retail sales should rise by at least 5.0% in February and continue to rise in March. If it does not happen, expectations of Canadian economic recovery will decrease. In this case, the Canadian dollar will weaken.

Thus, a decrease in the pace of bond purchases will support the yield growth and, as a consequence, the Canadian dollar growth. On the other hand, there are still many risks of economic slowdowns, such as:

• possible reduction in the rate of recruitment due to an increase Covid-19 cases;
• possible decline in retail sales;
• possible decline in oil prices.

Summary

If retail sales data on Wednesday, April 28 are worse than forecasted, it will be the first wake-up call. ADP Nonfarm Employment change data in mid-May will show how the business responded to the pandemic third wave. The focus also remains on the negotiations between the United States and Iran and the prospects for lifting restrictions on the oil trade. If retail sales rise over 4.0%, then the Canadian dollar is likely to rise against the GBP, EUR, and JPY.

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Disclaimer: This material contains general commentary only and is not intended to constitute or be relied upon as personal financial advice. To the extent that this material contains any general ...

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