THE TAKEAWAY: [Canada July retail sales rose faster than expected, fastest pace in nine months] > [Stronger spending to boost Canadian economy amid weaker building and employment] > [CAD bullish]
Canadian retail trade expanded faster than expected in July, with a jump in new car sales leading broad-based gains. Ottawa-based Statistics Canada reported today that retail sales climbed 0.7 percent in July from a month earlier, the fastest pace in nine months, following a revised decline of 0.3 percent in June. July’s figure beats the median forecast of economists surveyed by Bloomberg News, which had projected month-on-month growth of 0.2 percent.
The rise in household spending was seen across eight of 11 sectors, including a 1.7 percent increase for motor vehicle and parts dealers. Sales excluding autos grew 0.4 percent in July, which also exceeded economist forecasts for a 0.3 percent gain.
The boost in consumer spending will help fuel the Canadian economy. However, the impact of stronger spending will be tempered by recent declines in wholesale sales, building permits and employment, which is likely to dampen speculation for a rate rise by the Bank of Canada in coming months.
USDCAD 1-minute Chart: September 25, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
The Canadian dollar surged against the U.S. dollar following the release of the stronger-than-expected retail sales figures. At the time this report was written, the loonie remained higher against the greenback, with the USDCAD pair trading at C$0.9767.
--- Written by Tzu-Wen Chen, DailyFX Research
