Loonie Falls After Weak Canadian Retail Sales, Consumer Price Inflation Reports
October 21 2016 - 05:34AM
RTTF2
The Canadian dollar drifted lower against its major counterparts
in European deals on Friday, after data showed that Canadian retail
sales declined unexpectedly in August and consumer price inflation
rose less-than-expected in September.
Data from Statistics Canada showed that retail sales fell in
August, primarily driven by lower sales at motor vehicle and parts
dealers, and general merchandise stores.
On a seasonally adjusted basis, retail sales edged down 0.1
percent to C$44.0 billion in August. Economists had expected
the sales to rise 0.3 percent.
This follows a 0.2 percent drop in June.
Core retail sales, excluding motor vehicle and parts dealers,
were flat on month, reversing a 0.3 percent gain seen by
economists. The sales had fallen 0.2 percent in June.
Separate data from the same agency showed that Canada's consumer
price inflation ticked up 0.1 percent on a unadjusted monthly basis
in September. The estimate was slightly down from the 0.2 percent
rise expected by economists.
This follows a 0.2 percent drop in August.
Core inflation rose 0.2 percent month-over-month in September,
matching expectations. The reading was flat in August.
Meanwhile, Crude oil futures fell on the back of a stronger
dollar and on lingering doubts about a deal between OPEC and Russia
to curb supplies.
Markets will be paying attention when Baker Hughes releases its
North American rig count.
Crude for December delivery fell $0.23 to $50.41 per barrel.
The loonie showed mixed trading in the Asian session. While the
loonie held steady against the greenback and the yen, it declined
against the aussie. Against the euro, it rose.
The loonie weakened to a session's low of 1.0158 against the
aussie, after having advanced to 1.0081 at 5:00 pm ET. The loonie
is seen finding support around the 1.03 mark.
The loonie declined to 1.3347 against the greenback, its lowest
since March 2016. Continuation of the loonie's downtrend may see it
challenging support around the 1.36 region.
The loonie reversed from its early high of 1.4396 against the
euro, falling as low as 1.4513. On the downside, the loonie may
test support around the 1.47 zone.
Results of a survey by the European Central Bank showed that
longer-term expectations for euro area inflation were broadly
unchanged, but growth and unemployment projections were
lowered.
Average longer-term inflation expectations for 2021 stand at 1.8
percent, unchanged with respect to the previous survey, the
quarterly ECB Survey of Professional Forecasters revealed.
The loonie slipped to a 11-day low of 77.60 against the Japanese
yen, moving away from an Asian session's high of 78.75. The next
possible support for the loonie-yen is seen around the 76.00
area.
Looking ahead, Eurozone consumer sentiment index for October is
due shortly.
At 10:15 am ET, Federal Reserve Governor Daniel K. Tarullo is
scheduled to talk about "Pedagogy and Scholarship in a Post-Crisis
World" at the Columbia Law School Conference on the New Pedagogy of
Financial Regulation in New York.
At 2:30 pm ET, Federal Reserve Bank of San Francisco President
John Williams is expected to speak before the Federal Home Loan
Bank 2016 Member Conference, in San Francisco.
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