Canadian Dollar Surges Against US Peer on Solid Retail Sales in April

The Canadian dollar surged against the US dollar and the British pound on Thursday following the release of retail sales data for April, which revealed solid growth. The positive data came after a wholesale sales report earlier this week, which showed stronger than expected increase in the same month and improved investors’ confidence in the Canadian economic growth.

Statistics Canada, the nation’s official statistical office, released a retail trade report at 12:30 GMT today that stated that retail sales grew 0.8% to $46.8 billion in April. The increase followed a revised growth of 0.5% in March and exceeded analyst estimates of a 0.2% gain. Stronger retail sales in April stemmed from higher sales in 9 of 11 subsectors, with general merchandise stores and building material sales leading gains.
Sales of motor vehicles and parts lost 1.0% in April, but the decline was offset by higher sales at gasoline stations, clothing stores, and food and beverage shops. Core retail sales, which excludes sales at motor vehicle and parts dealers, rose 1.5% in April following a 0.1% decline in March, to beat expectations of a 0.7% gain.
Today’s retail sales report followed the release of wholesale sales data on Tuesday, which revealed a 1.0% gain versus expectations of a 0.5% gain. Both reports reflected robust spending trends in Canada and improved the outlook for economic growth.
The Bank of Canada changed its economic outlook to a more optimistic one amid strong economic growth in the second quarter. The central bank also signaled that it will consider a reduction of its monetary stimulus, which raised expectations of a possible interest rate hike during the second half of 2017.
USD/CAD dropped to 1.3216 as of 14:45 GMT on Thursday, the pair’s weakest point in two days, from 1.3326 when trading began today. GBP/CAD moved lower to 1.6733, which was the lowest level for the day, after starting the day at 1.6892.

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