.. Loonie Mixed as Canadian Retail Sales Rebound, Leading Indicators Advance

23 May 2012 13:48 GMT THE TAKEAWAY: Canada Retail Sales Bounced 0.4 Percent, Leading Indicators Rose 0.3 Percent> Positive Signal for Economic Growth Coming to the Middle of the Year > CAD Mixed
Retail Sales
Canadian retail sales rebounded more than forecast in March after February pullback, fueled by higher sales in motor vehicles, clothing, sporting goods, building material and garden equipment.
Sales in retail stores rose 0.4 percent to a seasonally adjusted C$39.05 billion in March, Ottawa-based Statistics Canada reported today. The print was higher than economist’s projection of 0.3 percent gain, according to Bloomberg News survey. The less volatile figure, excluding auto sector, modestly edged up 0.1 percent in Marchcompared to 0.5 percent increase widely predicted.Meanwhile, December’s reading was revised downwardly to a gain of 0.4 percent from a surge of 0.5 percent initially reported.
Gains were recorded in seven of eleven major categories that account for fifty-six percent of total retail sales in March. Sales at motor vehicle and parts dealers surged 1.2 percent as a result of 0.7 percent increase in receipts at new car dealers and 7.7% advance at other motor vehicle dealers. Similarly, building material and garden equipment posted 1.8 percent rise, a second consecutive monthly gain. Clothing and clothing accessories store sales also edged up 1.3 percent, largely attributable to 7.2 percent increase at shoe stores.
Regarding to region, retail sales climbed in four of thirteen major provinces in March. Most of gains were concentrated in Ontario (+1.2%) due to warmer than usual weather. On the contrary, News Brunswick registered the biggest decline of 1.5 percent.
Leading indicators
Another report issued by Statistics Canada at the same time showed that the Canada’s composite leading indicators rose for the tenth straight month in April on substantial improvement in housing sectors. The index surged 0.3 percent last month, matching with consensus forecast from Bloomberg Survey. Meanwhile, March reading was downwardy revised to a gain of 0.3 percent from an advance of 0.4 percent initially estimated.
The composite leading indicator comprised of ten components which significantly affect cyclical activity in the economy and together represent major categories of Gross Domestic Product. Seven of ten components registered gains in April compared to eight in the previous month.
Housing index advanced 3.5 percent, mainly contributed to the gain in April leading indicators. The financial components remained positive, as did employment in services. In contrast, manufacturing components deteriorated. New orders fell for the second month in the row (-1.2%) while the ratio of shipments and inventories have flatted.
USDCAD 1-minute Chart: May 23, 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen
The Canadian dollar was traded mixed ahead North American session today as the loonie strengthens versus high-yielding currencies (Australian dollar, New Zealand dollar) but weakens versus safe-haven currencies (U.S. dollar, Japanese yen and Swiss franc). As can be seen from the 1-minute USDCAD chart above, the loonie immediately weakens 20 pips versus the greenback in the minutes following the retail sales and leading indicator reports. Nonetheless, the loonie quickly saw correction after ten minutes and edged 35 pips higher to $C1.021 per U.S. dollar.

Loonie Remains Strong as Canadian CPI Softened, Leading Indicators Advanced in March

AppId is over the quota
AppId is over the quota
THE TAKEAWAY: Canada Consumer Price Index Increased 0.4 Percent on Monthly Basis and 2.0 Percent on Yearly Basis in March, Leading Indicators Rose 0.4 Percent> Soft Inflation may Encourage Bank of Canada to Preserve its Low Interest Rate Policy throughout 2012>CAD Remains Higher

Consumer Price Index

Canada’s inflation has softened in March on slower price pressures for food and energy, dampening expectations for a rate hike in near term.

The consumer price index advanced 0.4 percent last month, following 0.4 percent rise in February, the Ottawa-based Statistics Canada reported today. The reading fell short of 0.5 percent gain anticipated,according to the Bloomberg News survey. Over a year prior, the all items index fell back to 2.0 percent from 2.6 percent in February. This 0.7 percentage point difference was mainly triggered by slower year-over-year increases in prices for food and energy.

The year-to-year cost of energy mounted 5.1 percent in March, following a 7.2 percent gain in the previous month, among which gasoline prices eased to 6.6 percent last month after climbing 8.9 percent in February. Electronic costs increased 5.3 percent compared to 8.7 percent in the prior month. Meanwhile, the food prices advanced 2.2 percent in the twelve months to March, after surging 4.1 percent in February. This slower increase was the result of month-over-month decline in food prices last month.

The Bank of Canada’s core index rose 0.3 percent on monthly basis and gained 1.9 percent on yearly basis. Year-over-year price pressured eased in March mainly due to slower price increases for electricity and price declines in woman’s clothing.

Leading indicators

Another report issued by Statistics Canada at the same time today showed that the Canada’s composite leading indicators rose for the ninth straight month in February on improvement in financial and housing sectors. The index surged 0.4 percent last month amid consensus forecast of 0.5 percent gain from Bloomberg News survey. Meanwhile, February reading was upwardy revised to a gain of 0.7 percent from an advance of 0.6 percent initially reported.

The composite leading indicator comprised of ten components which significantly affect cyclical activity in the economy and together represent major categories of Gross Domestic Product. Eight of ten components registered gains in March compared to six in February.

The financial components remained positive since both stock index and money supply witnessed the sizable gains in March. Likewise, the housing component recovered on advances in both existing home sales and starts. Meanwhile, manufacturing components showed mixed results with a gain of the ratio of shipments to inventories offset by decline in new orders.

USDCAD 1-minute Chart: April20, 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen

The Canadian dollar gains its footing versus most of its major trading partners ahead of an opening bell in North America trade today. The Consumer Price Index and Leading Indicators reports released today failed to trigger a noticeable volatility in the loonie. As seen from the 1-minute USDCAD chart above, the currency pair fluctuated between the range of 0.9910 and 0.9925 after the release. At the time this report was written, the U.S. dollar trades at C$0.9915.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

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