By CountingPips.com
Economic news out of Canada today showed that retail sales and consumer prices both increased by more than expected, according to separate data releases by Statistics Canada. Canadian retail sales increased by 0.7 percent to a C$35.7 billion total in January after a revised increase of 0.5 percent in December. The rise in retail sales was more than expected as economic forecasts were predicting a 0.6 percent increase for the month. On an annual basis, January’s retail sales level was 6.0 percent higher than the January 2009 level.
Core retail sales, excluding automobile sales, climbed by 1.8 percent in January following a revised gain of 0.7 percent in December. The rise in core sales also sharply surpassed forecasts that were expecting a 0.5 percent increase for the month.
Contributing to the gain in the retail sales numbers was an increase in building & outdoor home supplies stores by 7.4 percent in January. This sector was boosted by the government’s Home Renovation Tax Credit which was set to expire in January. Also contributing positively to the report were notable gains in food & beverage stores (+1.9%), furniture, home furnishings & electronics stores (+2.5%) and miscellaneous retailers (+1.1%).
Canadian Consumer Prices rise in February
Consumer prices in the Canada increased in February, according to a separate report released today by Statistics Canada. The Consumer Price Index, a measure of inflation, rose by 0.4 percent in February after gaining by 0.3 percent in January.
On an annual basis, consumer prices registered a 1.6 percent increase over the February 2009 level following a 1.9 percent annual increase in January. February’s data surpassed economic forecasts that were expecting a 0.3 percent monthly increase and a 1.4 percent annual advancement.
Rising energy prices contributed significantly to the higher cpi levels in February. Gasoline prices increased by 15.3 percent on an annual basis in February following a 23.9 percent increase in January on an annual basis.
Consumer prices, excluding energy prices, increased by 1.3 percent on an annual basis in February following a 1.3 percent gain in January.
The Bank of Canada’s core index, released in the report, showed that core consumer prices rose by 2.1 percent on an annual basis in February compared with an annual rise of 2.0 percent in January. This data beat market estimates that were predicing a 1.7 percent core index increase for February. On a monthly basis, the BOC core index saw prices rise by 0.7 percent from January to February.
Canadian Loonie stronger in Forex Trading
The Canadian loonie dollar has been stronger today in the currency markets versus most of the major currencies after the retail sales and inflation data. The Canadian currency has increased sharply versus the euro, British pound and Australian dollar while trading slightly lower versus the Japanese yen and U.S. dollar after paring early gains, according to currency data from Oanda.
USD/CAD 1-Hour Chart – The U.S. dollar has fought back today against the Canadian loonie as the USD/CAD pair trades around the 1.0150 level at about noon of the US session. The USD/CAD opened the day trading around 1.0136 at 00:00GMT and fell all the way to the 1.0061 exchange rate on the Canadian news releases before a turnaround amid US dollar strength.
