Canadian Dollar Drops After Shockingly Poor Retail Sales

The Canadian dollar fell during Friday’s trading session due to surprisingly poor retail sales data and falling crude oil prices. The currency trimmed losses later, though, and even managed to gain on some of its rivals.
Statistics Canada reported that retail sales dropped by 1.2% in October. That was a total surprise to market participants, who were counting on an increase of 0.5%. The main contributor to the decline were lower sales at motor vehicle and parts dealers as well as at building material and garden equipment and supplies dealers. The motor vehicle and parts dealers subsector demonstrated the biggest decline, falling by 3.2%. But while automobile sales account for about 20% of the total retail sales, they tend to be very volatile, distorting the underlying picture. But even excluding auto sales, retail sales were down 0.5%. That is compared with the expected increase of 0.2%. Some analysts pointed out that retail sales were on track to the weakest performance since the financial crisis.
Crude oil, Canada’s biggest source of export revenue, was not helping the Canadian dollar as well. In particular, futures for the North American grade of crude fell more than 1% on Friday. Market analysts provided various possible reasons for the drop. While the strength of the US dollar was one of the most obvious ones, some experts also speculated that traders were taking profit ahead of holidays.
USD/CAD rose from 1.3125 to 1.3153 as of 22:00 GMT today but pulled back from the day’s high of 1.3181. EUR/CAD dropped from 1.4594 to 1.4566, falling after the earlier rally to 1.4615. CAD/JPY declined from 83.31 to 83.17 but bounced from the session low of 82.92.

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