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Looking to grab some quick pips off a news event this week? The upcoming Canadian retail sales release this Friday could be a good chance to catch pips!

You see, the retail sales report serves as the primary gauge of consumer spending, which in turn accounts for a huge chunk of overall economic activity. In other words, rising retail sales figures are typically indicative of stronger growth.

Apart from that, higher consumer spending also tends to translate to increased business activity when manufacturers ramp up operations to keep up with demand.

What happened last time?

  • March headline retail sales up 1.7% vs. 0.8% consensus
  • March core retail sales rose by 1.1% vs. 0.8% estimate
  • February headline retail sales upgraded from 0.6% to 0.7%
  • February core retail sales revised from 0.8% to 1.0%

The previous release was strong across the board, with both headline and core versions for March beating expectations by a mile. Headline retail sales boasted of an impressive 1.7% gain, more than twice as much as the 0.8% estimate, while the core figure came in at 1.1% versus the 0.8% consensus.

Components of the report revealed that gains were mostly spurred by higher gasoline sales at stations again. In turn, gasoline sales were boosted by stronger prices even as volumes were relatively unchanged.

Still, this was enough to bring retail sales up by 0.1% for the first quarter of 2019, a decent recovery over the earlier period’s 0.5% decline.

Overlay of CAD Forex Pairs: 15-minute Charts
Overlay of CAD Forex Pairs: 15-minute Charts

The Canadian dollar had a bullish run-up to the release and popped higher upon seeing stronger than expected results. However, the currency eventually slid across the board and returned those quick pips and more.

Looking back at CAD price action then reveals that the Loonie selloff was mostly spurred by weaker crude oil on account of a surprise buildup in stockpiles.

What’s expected this time?

  • April headline retail sales to show 0.3% uptick
  • April core retail sales to come in at 0.6%

For this week’s upcoming retail sales release, the headline reading is expected to post a 0.3% uptick while the core version of the report might show a 0.6% gain.

Another month of higher gasoline sales could be reported as crude oil continued to edge up in April. However, manufacturing sales in April slipped by 0.6% versus the earlier 2.6% jump and the expected 0.6% gain, underscoring the projected fall in consumer spending.

Employment in Canada made quite the rebound in the same month, rising by 106.5K versus the earlier 7.2K drop. Then again, majority of these gains came from part-time hiring.

The April trade report came in better than expected at a 1.0 billion CAD deficit versus the earlier 2.3 billion CAD shortfall, but this was mostly caused by lower imports.

Keep in mind that the Bank of Canada joined most of its peers in switching to a less upbeat policy stance, so disappointing results could fuel easing expectations. Just be mindful of potential volatility right around the time of the release and make sure you practice proper risk management!