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Canadian retail sales overview

Statistics Canada will publish the monthly retail sales report for September later this Friday at 13:30 GMT. Consensus estimates point to a modest 0.1% decline for the third consecutive month and a tepid 0.1% growth in core sales (excluding automobiles), up from  the previous month’s dismal reading of -0.2%.
As analysts at TD Securities explained: “Motor vehicles will weigh on the headline print after a pullback in auto sales, leaving the ex-autos measure down just 0.1%, while volumes should see a more substantial decline owing to higher consumer goods prices. This would still leave retail volumes up ~1% (annualized) for Q3, a slight pickup from the 0.4% increase in Q2 which contributed to the weakest quarter of household consumption since 2012.”

How could it affect USD/CAD?

Ahead of the key release, the USD/CAD pair added to the previous session’s modest pullback from multi-week tops and was seen hovering around the very important 200-day SMA. A surprisingly stronger reading might be enough to prompt some follow-through long-unwinding trade and force the pair to extend the overnight rejection slide from 5-1/2-month-old descending trend-line resistance. The downward trajectory then is likely to accelerate further towards mid-1.3200s before the pair eventually aims to retest weekly lows support near the 1.3200-1.3190 region.
Alternatively, a weaker reading might provide some temporary boost to the major, through the mentioned trend-line resistance, currently near the 1.3320 region, might continue to cap the upside. However, a sustained breakthrough might prompt some aggressive short-covering move and accelerate the move up towards October monthly swing highs – near mid-1.3300s, en-route the next major hurdle near the 1.3380-85 region and the 1.3400 round-figure mark.

Key Notes

   “¢    USD/CAD: Sellers cheer WTI strength, eyes on Canadian Retail Sales/trade headlines
   “¢    USD/CAD stays directionless below 1.3300 ahead of key data releases
   “¢    USD/CAD Intraday: 1.3235 expected

About Canadian retail sales

The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.