Canada: Downbeat retail sales not enough to sink a January rate hike - TDS

Sandeep Kanihama FXStreet Contributor

Analysts at TDS note that Canada’s retail sales rose by 0.1% m/m in September, well below TD's on-consensus forecast for a 1.0% increase, though sales were revised higher for August.

Key Quotes

“Ex-auto sales were up 0.3% (TD: 1.1%, market: 1.0%) while volumes fell by 0.6% m/m to the detriment of GDPtracking.”

“This report will not be a game changer for the Bank of Canada who had already penciled in a slowdown in Q3 growth. Our latest tracking for Q3 is slightly below 2% and roughly in line with projections from the October MPR, and we expect a rebound in the fourth quarter.”

“FX: The downside miss in retail sales takes some of the momentum out of CAD but a soggy greenback, firmer oil prices and scope for a January BoC rate hike leave us looking for USDCAD to grind lower.”

“Rates: Front-end rates rallied 1-2 basis points on the release and the market pricing for a January rate hike edged slightly lower to 31%.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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