Canadian Retail Sales Rise Unexpectedly in February

CAD Retail Sales Actual 0.2%, Expected -0.2%, Previous 1.8% (Revised from 1.9%)

CAD Core Retail Sales Actual 0.6%, Expected 0.2%, Previous 1.4% (Revised from 1.3%)

Release Explanation: Retail Sales are a very important set of figures that make up a large percentage of consumer spending numbers. Retail sales are the measure of the total sales of goods and services by retail stores. Service-based economies rely on the strength of the consumer to keep things moving along, this therefore impacts PCE and CPI, the Inflationary reports.

“A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the economy.” TheLFB-Forex.com Trade Team said.

TheLFB-Forex.com Trade Desk Thoughts: According to Statistics Canada, retail sales rose 0.2% in February after rising 1.8% in January. “This comes, after the last few months of 2008 saw retail sales declined at a record pace. To some extent, its unclear whether the trend is resuming its upside trend, or retail sales just bounced off the lows,” TheLFB-Forex.com Trade Team said.

Sales rose in five of eight retail sectors. The largest contributors to the increase in February were building and outdoor home supplies stores (+3.0%) and food and beverage stores (+0.7%). Higher sales at building and outdoor home supplies stores did not offset the declines observed in the previous two months, which totaled about 7%. As for food and beverage stores, the increase mostly reflects higher sales at beer, wine and liquor stores.

The largest decline was a 1.9% decrease in sales at furniture, home furnishings and electronics stores in February. Sales in this sector have decreased each month since July 2008.

The automotive sector posted a 0.3% sales decrease, mainly reflecting a 1.6% decline in the value of sales at new car dealers. Partially offsetting this decline was increased sales at gasoline stations, which rose for the second month, mainly reflecting higher prices at the pump.

Forex Technical Reaction: Despite the better than expected numbers, the Cad gained 30 pips immediately after the release. The pair bounced off the 1.2325 area, which has provided support the last three days of trading.

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