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Canadian retail sales rose well above expectations: 2.1% y/y in the headline number and 1.2% in core sales. This was more than enough to beat a miss in inflation figures.

USD/CAD dropped to a new low of 1.2938 before bouncing a bit.

The bounce in retail sales was certainly good news after drops of 2.1% and 1.7% in sales back in January according to the revised data. It was also well above 0.6% and 0.4% forecast.

Prices in Canada didn’t go too far, perhaps the  impact of the rebounding Canadian dollar. CPI advanced by 0.5% m/m as expected, but core CPI rose only 0.2%, half the estimations. Year over year, CPI rose 1.4%, worse than 1.5% predicted and core prices are now up only 1.9%, down from 2% expected and seen last time.

Canada was expected to report a rise  of 1.5% y/y in headline CPI and 2% in core  inflation for the month of February. Retail sales carried expectations for a bounce, with 0.6% in headline sales and 0.4% in core sales after big falls last time.

USD/CAD resumed its slide towards the release, with a drop under 1.30. This went hand in hand with  a resumption of the rise in oil prices. WTI  broke to new highs, closer to $41.

The Canadian dollar enjoyed the  extremely dovish rate decision by the Fed  to rise against the greenback.  However, it seemed to lose some steam on the way: after breaking 1.30, oil prices continued rising but the C$ could not keep up.

Nevertheless, USD/CAD is 1800 pips below the highs seen in mid January.

Here is how the move looks on the USD/CAD  30 minute chart:

Canadian dollar rises March 18 2016