Canadian Retail Sales Decline in March, USDCAD Rallies
-Initial Jobless Claims miss at 326K vs. 310K surveyed, prior revised higher by 1K
-Canadian Retail Sales decline MoM, Ex Auto edges out 0.1% gain
-Chicago Fed Nat Activity misses at -0.32 vs. 0.00 surveyed
Initial Jobless Claims for the week ending May 17th came in at 326K vs. 310K estimated and 298K prior. We saw a jump higher in USD/CAD as Canadian retail sales also hit the wires and came in weaker than expected. MoM in March saw a decline of 0.1% while the Ex Auto figure was able to just edge out a 0.1% gain. This follows US trends in that auto sales continue to help support the headline sales figure. This weak Canadian retail sales data comes on the back of last week’s poor housing data. CAD traders will be looking for weak CPI data tomorrow to see any further follow through. If we have set a USDollar low, as some technical objectives indicate, this could be an important low in USD/CAD, especially in the context of weakening housing data out of Canada. The overextended property market is incredibly vulnerable to a sharp pullback with a median wage to home price ratio at 9. In comparison, during the height of the US bubble we saw the ratio at 7 at the peak.
Note we have event risk at 14:00GMT with key U.S. housing data. FOMC Minutes on Wednesday indicated the committee was eyeing housing data and concerned about downside risks as the Fed pulls back from MBS purchases.
USD/CAD May 22, 2014 (5-Minute Chart)
Source: FXCM Marketscope
On Friday we’ll have more event risk for the Canadian Dollar with CPI data and more US home data:
Gregory Marks, DailyFX Research Team
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