Friday, Canada will release its report on retail sales. Because this is expected to impact the canadian dollar and other currencies in the forex market, here is our usual guide to trading.
Back on the last publication
The report on retail sales for the month of February revealed a decline in the sector by 0.6%. This represents a fall more significant than the previous one (0.1%) and a significant slowdown compared to the 2.3% increase recorded in January.
The decline is relatively significant as 5 of the 11 sub-sectors, which account for 67% of total retail sales, have recorded a decline in sales. More concretely, the sector of automobile sales and spare parts lost 1.8% and fuel sales by service station were down 3.6% over the period.
Overall, the February report on retail sales has been negative but the price of oil were slightly restored at the time allowing for a relative impact on the canadian dollar. The loonie has all the same finished by fall.
That should happen this time ?
For the month of march, analysts expect a recovery sufficient to push the figures into positive territory. The reading total is expected to print a 0.4% increase and the base by 0.2%.
If you look at the main indicators available, there are several things :
— The average earnings per hour worked increased by only 0.004 per cent between February and march, compared with 0.54% for the previous period.
— The number of people employed in the trade industry (wholesale and retail) has increased from 16 to 900 during the same period.
— Imports of goods and consumption have increased by 1% in march.
On the whole, the key indicators support a recovery in the sector in the month of march even if the wages have not really increased.
If the report is better than expected, the canadian dollar is expected to advance against most of its counterparts in the forex. This is known as the most likely scenario. If on the other hand, it is less good, then one should attend a mass sale of dollar CAD. Note that, in addition, the country will publish on the same day its CPI which affects usually a little more the market.