When are the Canadian retail sales figures and how could they affect USD/CAD?

Canadian retail sales overview

Statistics Canada will publish the monthly retail sales report for May later this Tuesday at 12:30 GMT. Following the previous month's slump of 26.4%, consensus estimates point to a strong rebound in consumer spending. The headline sales are expected to have jumped by 20% MoM in May. Meanwhile, sales excluding automobiles are also anticipated to have rebounded swiftly and come in to show a growth of 12% during the reported month.

According to the National Bank of Canada, “Gasoline prices and auto sales rebounded in the month, a development which may have helped headline outlays to increase 20% MoM. While impressive, this result would still leave total Retail Sales down 20.4% on their February level. Spending on other items than autos, meanwhile, could have benefited from the partial reopening of the economy and advanced 12.5%.”

How could it affect USD/CAD?

Ahead of the key release, the USD/CAD pair dived to six-week lows and took along some short-term trading stops placed near the key 1.3500 psychological mark. A strong rally in crude oil prices underpinned the commodity-linked currency – the loonie – and exerted some heavy pressure on the major. A stronger-than-expected reading will provide an additional boost to the already stronger Canadian dollar and pave the way for a further near-term depreciating move for the pair.

From current levels, the pair seems vulnerable to extend the slide further towards the 1.3420-15 horizontal support. A subsequent break below the 1.3400 mark will set the stage for a fall June monthly swing lows, around the 1.3315 region. On the flip side, the 1.3500 mark might now act as immediate strong resistance. Any meaningful positive move beyond the mentioned barrier might still be seen as a selling opportunity and remain capped near the 1.3570 supply zone.

About Canadian retail sales

The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.

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