Canadian Dollar Touches Highest Level in Three Weeks on Strong Retail Sales

The Canadian dollar rose against its US counterpart on Tuesday to touch the highest level in three weeks. The loonie also had broad gains against other major peers as Canadian core retail sales posted a strong increase in June, according to fresh data released today.

Statistics Canada, the nation’s official statistical office, said earlier today in a report that retail sales edged 0.1% higher in June following a 0.5% increase in May. Retail sales grew in 6 of 11 subsectors to reach a total of $39.06 billion, which marked the fourth consecutive month of gains.

General merchandise stores reported 2.9% higher sales in June, while clothing stores had 2.7% more sales. Sales of building material and supplies rose 2.2% to post the ninth gain in the past 10 months.

On the other hand, sales of motor vehicles and parts retreated 1.4% following a 2.3% gain in May, while gasoline stations had 1.8% fewer sales as gasoline prices declined. Lower motor vehicles and gasoline sales almost canceled out gains in other subsectors.

Core retail sales, which exclude automobiles, rose 0.7% in June to exceed analyst expectations of a 0.3% increase. Core retail sales are a key indicator of consumer spending in Canada, which reflects on economic growth. After excluding sales at gasoline stations as well, Canadian retail sales were up 1.1% in June.

The strength that the Canadian economy has displayed in 2017 so far prompted the Bank of Canada to raise interest rates for the first time in about seven years. Traders now hope for another interest rate hike as soon as October if economic conditions remained stable.

USD/CAD traded at 1.2563 at 15:55 GMT on Tuesday after dropping to 1.2526 at 13:45 GMT, the pair’s lowest level since August 2. USD/CAD began trading today at 1.2555. GBP/CAD was at 1.6118 from 1.6061 at 13:40 GMT, a level last seen on January 2017. GBP/CAD started the day at 1.6196.

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