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News traders huddle up! Tomorrow at 12:30 pm GMT Canada will print its retail sales numbers for the month of June.

Think you’re ready to trade the event? Here are some points that might help:

May’s numbers kicked butt

  • Headline retail sales (m/m): 2.0% vs. 1.1% expected, 0.9% previous
  • Core retail sales (m/m): 1.4% vs. 0.6% expected, 0.2% previous
  • April’s headline retail sales revised higher from -1.2% to -0.9%
  • April’s core headline retail sales revised higher from -0.1% to 0.2%

Retail activity in Canada rose by 2.0% in May, which was not only stronger than April’s 0.9% uptick and estimates of a 1.1% reading, but also marked the fastest increase in SEVEN months.

Core retail sales also strengthened as it clocked in at 1.4% when many had only seen a 0.6% increase. Last but not the least, April’s headline and core retail sales figures were also revised higher.

CAD 1-Hour Charts: May Retail Sales
CAD 1-Hour Charts: May Retail Sales

The growth in core retail sales, combined with an upside surprise in Canada’s inflation reports printed at the same time as the retail sales data, boosted the Loonie by as much as 1% during the U.S. trading session.

We’re getting June’s numbers

This week market geeks only expect to see a 0.3% growth, while the core figure – which excludes volatile items such as auto sales – is only expected to print a 0.1% uptick for the month of June.

What’s up with the weak expectations? Let’s look at some leading indicators for clues:

Statistics Canada’s June employment data showed that a net of 14,000 workers had lost jobs in the wholesale and retail trade industry in June. Not good.

Meanwhile, trade numbers in the same month reflected stronger (+1.2%) increases in consumer goods imports even as shipments of aircraft and other transportation equipment decreased following a strong reading in May.

Historicals don’t help much

If we look at the last ten June releases, we can see that analysts tend to underestimate both the headline and core retail sales about as often as they overestimate them.

Headline retail sales (June)
Headline retail sales (June)

Perhaps the most helpful takeaway from these charts is that May’s headline retail sales numbers could follow the pattern and see downside revisions this week.

Core retail sales (June)
Core retail sales (June)

Trading tips and tricks

Based on May’s strong performance and the fact that a lot of workers in the wholesale and retail industries lost jobs in June, then it’s likely that we’ll see a slight pullback (read: weaker) numbers for this release.

Don’t rule out an upside surprise, though. After all, demand for consumer goods was one of the bigger drivers of imports in June.

Whichever bias you’re trading, remember that your best bet is to trade the Loonie’s initial reaction.

See, the last three releases (including the chart above) show that the Loonie’s initial direction after the report is released sticks, at least until the end of the trading session.

CAD 1-Hour Charts: April Retail Sales
CAD 1-Hour Charts: April Retail Sales
CAD 1-Hour Charts: March Retail Sales
CAD 1-Hour Charts: March Retail Sales

Oh, and take note that the U.S. Fed is also set to release its August meeting minutes less than two hours after Canada prints its retail sales data.

This means that traders might take profits or even stay in the sidelines altogether before the top-tier release. Make sure you don’t get caught in price action that has nothing to do with your original trading plan!

Hope this helps, fellas. Good luck and good trading!