Canadian Dollar Down Despite Stronger-Than-Expect CPI - Retail Sales on Hand Tomorrow
Statistics Canada released their latest inflation report, and the results initially pushed the Canadian dollar higher, but a rebound in the US dollar later in the day cut those gains short. Canada's headline consumer price index (CPI) jumped 0.7 percent in May due to increased costs for food, household operations, transportation, heath/personal care, recreation/education, and alcohol/tobacco. This rise prevented the year-over-year measure from falling negative, as had been expected, but the rate did still slow to more than 15-year low of 0.1 percent from 0.4 percent. On the other hand, the Bank of Canada's (BOC) core CP, which excludes 8 volatile components, rose 0.4 percent during the month and pushed the annual rate up to 2.0 percent from 1.8 percent, suggesting that the threat of deflation in Canada is minimal and that the BOC will not pursue a quantitative easing program.
On Friday, Statistics Canada is expected to report that Canadian retail sales rose 0.1 percent during April, which would mark the fourth straight increase. Economic data for the nation has reflected mixed results in recent months, but figures for April, such as employment and Ivey PMI, were generally optimistic which may indicate that retail sales will rise a bit more than anticipate. On the other hand, Statistics Canada said yesterday that wholesale sales fell by 0.6 percent in April, marking the seventh straight month of contraction, which doesn't bode well for the retail side of the coin.