CAD: Retail Sales and CPI data in focus – RBC CM

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 20, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that the markets will be keeping an eye on the release of Canadian retail sales and CPI data which are out today.

    Key Quotes

    “Our economists are a tick above consensus for headline CPI (RBC: 1.1%y/y, cons 1.0%). We see the decline in gas prices more than offset by a 0.3%m/m gain in core CPI. Core CPI is supported by seasonal increases in motor vehicles and clothing, outweighing a seasonal drop in travel services (-5%m/m). Core CPI should remain at 2.1%y/y (cons 2.0%). The outcome should not move the needle for the BoC, which has consistently seen underlying inflation at 1.5–1.7% of late, looking through temporary impacts from lower oil prices (headline lower) and CAD depreciation (headline/core higher).”

    “Meanwhile, our economists look for retail sales to beat expectations on the core measure (RBC: 0.4%m/m, cons -0.4%) even if the headline disappoints. Core sales should be supported by solid employment growth in 2015 so far and possibly a delayed impact from retroactive child care benefit payments in late July. The 0.3% m/m gain expected on a volumes basis would be consistent with 2.5% q/q saar GDP growth in Q3 (RBC Economics tracking and BoC forecast). WTI is hovering just above USD 40/bl again, and with USD underperforming overnight, CAD was dragged down in sympathy. AUD/CAD has broken above the 200dma for the first time since August but we still like it a lot lower on a 3-to 6-month horizon (holding a 0.90/0.85 put spread expiring in March 2016).”
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