Canadian January Wholesale Sales Rose 3.3%, Motor Vehicle Sales Surge

Canadian wholesales sales rose 3.3% for January which was substantially above consensus expectations of a 0.3% monthly gain and the strongest monthly advance since November 2009.

Although there was a downward revision to December’s data to 0.3% from 0.7% originally reported, there was a 4.7% annual increase.

Sales increased in four of the seven sub-sectors while in volume terms sales rose 3.4% for a 4.2% annual increase.

There was a notably strong increase in motor vehicle and parts sales of 17.1% on the month to give an 8.1% annual increase.

Excluding motor vehicles sales, there was a 0.3% increase for January to give a 3.9% monthly advance.

Food sales rose 0.2% on the month with a 4.2% annual gain with sales of personal and household goods rose 3.0% on the month to give an 8.4% annual increase.

Building materials and machinery sales both recorded a slight decline in sales on the month.
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Canadian January Retail Sales Jump 2.2%, December Seasonal Weakness Reversed

Canadian retail sales rose 2.2% in January compared with consensus expectations of 1.3%. This followed a decline of 0.4% for December which was originally reported as a decline of 0.5% with year-on-year growth of 4.5%.

Underlying sales rose 1.7% on the month compared with an expected gain of 1.2%. The sharp increase followed a revised 0.5% decline for December to give a 4.6% annual increase.

There was a strong 3.8% increase in motor vehicles and parts sales on the month to give a 4.2% annual increase.
Sales increased in 10 of the 11 sub-sectors on the month which suggests a wider base of sales strength than seen in the wholesales sales report for the month where sales growth was even more concentrated in motor vehicles.

Food and drink sales increased 1.3% on the month and there was also a strong report for the health and personal care sector with a monthly advance of 6.0%.

The monthly increase in gasoline sales slowed to 0.5% as price increases moderated, although there was still a 17.8% annual increase.
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Canadian February Consumer Prices Rose 0.2%, Inflation Rate Slowed To 2.0%

Canadian consumer prices rose 0.2% in February following a 0.9% increase for January, in line with consensus expectations, with the year-on-year increase declining slightly to 2.0% from 2.1% in January.

Goods prices overall fell 0.2% on the month with a 1.9% annual increase while services-sector prices rose 0.4% for a 2.2% annual increase.

There were significant monthly price gains for clothing and footwear as well as recreation and education.

Food prices rose 0.1% on the month with prices falling 2.3% on the year with fruit and vegetable prices showing strong annual declines given big increases in prices last year. Energy prices fell 3.0% on the month which reduced the year-on-year increase to 12.3%.
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USD/CAD Weekly Forecast March 27-31

USD/CAD consolidated for most of the week, tracing out fluctuations in oil prices. The pair managed to hold above important support on larger timeframes, resulting in a small weekly gain of 45 points after a sharp drop in the week prior.

An early week drop below support was not sustained, resulting in a rally above resistance, which was also not sustained. With several technical indicators in play in the upcoming week, a breakout appears imminent and will clarify the trend for the currency pair.

After a sharp drop in WTI crude oil prices (USOIL) in the second week of the month, a narrow range had been playing out. Dips towards the $47.00 handle have been bought as a 61.8% Fibonacci level measured from mid-November lows has been drawing buyers. On a daily chart, a rising channel had encompassed price action since the start of August. There was a daily close below the channel bottom in the past week which indicates the channel is not respected, despite a rally on Friday taking prices back above the channel bottom. A range break will tend to impact USD/CAD, support remains at the 61.8% Fibonacci level at $47.16. Range resistance is seen at $49.45.
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USD/CAD Turns Higher To Erase Early Day Losses

After gapping lower at this week’s open on the back of a broader dollar decline, USD/CAD turned higher in the North American session to wipe out early day losses.

The pair found support slightly ahead of a horizontal level at 1.3317 and turned sharply higher to close this week’s gap and to scale above Friday’s highs prior to retreating.

Bank of Canada’s Poloz: Positive Data Points, Can’t Forget Downside Risks

Bank of Governor Poloz’s speech to Durhan College was primarily related to economic history together with the benefits of free trade, inward investment and migration.

In the media Q&A session afterwards, however, there were references to the current economic outlook and monetary policy.

Poloz stated that the risks identified in the previous Monetary Policy Report (MPR) are still on the table.

He was confident that the government’s economic stimulus would show up in economic data this year and contraction in the energy sector appears to be behind us.
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Canada MoM GDP MoM 0.6% vs. 0.3% est., YoY 2.3% vs. 1.9%

Canada's GDP for the month of January came in much better than expected at +0.6% month on month Versus +0.3% estimate. The Year on Year came in at 2.3%  versus 1.9% estimate.
The better than expected data has sent the USDCAD to the downside and back toward the 100 day moving average at 1.32919.

Gross domestic product gains were on the strength of widespread growth across both goods- and service-producing industries. With the exception of October, gross domestic product has risen every month since June 2016.

The manufacturing sector was the largest contributor to the increase in gross domestic product, expanding 1.9% in January. With the exception of October, the manufacturing sector has grown every month since June 2016.

Retail trade grew 1.5% in January, the sixth increase in seven months, with 10 of the 12 subsectors advancing. Motor vehicle and parts dealers rose 1.2%, primarily on the strength of more activity at new car dealers. The largest decline in terms of output was a 3.3% contraction at gasoline stations.
Mining, quarrying, and oil and gas extraction expanded 1.9% in January after contracting 0.5% in December.
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USD/CAD Weekly Forecast April 3-7

The rare combination of notable gains in the greenback and oil prices kept the USD/CAD exchange contained within a range for a second consecutive week.

Downside support at 1.3283 has proven to be resilient as the level has held the pair higher on four attempts following the March Fed meeting. With the pair trending lower since March 9th, a sustained break of the level would be needed for a continuation of the bearish trend and a catalyst may be required.

WTI crude oil prices (USOIL broke higher from a two-week range to erase just over half of the losses posted in the early month. Oil prices have scaled back above the psychological $50.00 price point in a momentum-driven recovery as a lower than expected build in last week’s inventories report acted as a driver.

Further gains may require an additional catalyst on the approach to major resistance. The $54.00 price point proved to be a notable hurdle as it rejected several attempts from December to February. Profit taking ahead of the major resistance level may lead to a drop in upside momentum in the upcoming week. The first level of resistance falls at $51.50 as it triggered about a $10 drop in October.
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Canadian March PMI Index Strengthens To 55.5, Strongest Reading For 29 Months

The Markit Canadian PMI manufacturing index strengthened to 55.5 for March from 54.7 the previous month. This was the 13th successive reading above 50.0 and the fastest rate of growth since October 2013.

Production continued to strengthen for the month with the fastest rate of output growth for over three years.


Canada International Merchandise Trade for February -0.97B vs +0.60 est.

Last month was originally reported at +0.81B surplus. Revised to +0.42B

Following three consecutive monthly surpluses, Canada's merchandise trade balance with the world posted a $972 million deficit in February. The expectations were for a surplus of $600 million.  
  • Exports were down 2.4%, with decreases in 8 of 11 sections. 
  • Imports edged up 0.6%, on higher imports of special transactions trade and motor vehicles and parts.
The prior month's surplus was also lowered to a 420 million surplus from a previously reported surplus of 810 million.

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