CAD Inflation And Retail Sales Preview: Time To Choose A Direction

  • Canadian traders have a double-feature Friday with Inflation and Retail Sales data.
  • The absence of substantial US figures means the Canadian Dollar’s next moves depend on this publication.
  • Inflation will likely have the upper hand in case the figures go in different directions.

Canada publishes its inflation data for March and Retail Sales for March on Friday, May 18th, at 12:30 GMT. In some such publications in the past, parallel US data added to the mix and the abundance of economic figures triggered a choppy reaction in the USD/CAD. This time, the Canadian Dollar is due to move only on Canadian data.

In other cases, the figures offset each other, also resulting in a choppy reaction. To have the most substantial impact, both publications need to go in the same direction: either exceed expectations or fall short. Nevertheless, inflation is likely to have the upper hand.

First, the Consumer Price Index numbers are more recent, for April, in comparison to the somewhat stale consumption data. Secondly, the Bank of Canada has recently forecast a pick up in inflation in later in the year. These are the first inflation indicators for the second quarter which carries higher expectations than the weak first quarter of the year.

A third reason stems from the reaction seen in the previous publication. When Core CPI decelerated from 1.5% to 1.4%, the loonie suffered.

What is expected?

The single most important number is the Core CPI YoY. It is expected to hold onto the previous pace at 1.4%. A slowdown to 1.3% or below will likely weigh on the loonie regardless of the other numbers while an acceleration to 1.5% or above would probably give the C$ a boost.

Month over month, core prices carry expectations for a rise of 0.2%, also mimicking the previous publication. Headline inflation is projected to rise by 2.6% YoY, an acceleration from 2.3% seen in March. Month over month, a repeat of the 0.3% increase is on the cards.

The other inflation data are likely to come out in the same direction of the standout Core CPI YoY.

1 2
View single page >> |

Disclosure: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.