Data this morning from StatsCanada showed that Canadian wholesale sales increased +1.7% to +C$65.3B in April, the fifth consecutive monthly increase.
Higher sales were recorded in five of seven subsectors accounting for +86% of total wholesale sales.
Digging deeper, the motor vehicle and motor vehicle parts and accessories subsector were the leading contributor to April’s gains, followed by the machinery, equipment and supplies subsector.
However, after removing the effects of price changes, wholesale sales increased +1.6% from March to April.
Loonie takes flight
The USD has come under pressure against, in particular, G10 currency pairs, ever since the Fed dropped heavy hints last week that it’s ready to start a monetary policy easing cycle as soon as July.
CAD (C$1.3156) is along for the ride, supported by rate differentials, stronger commodity prices, crude oil and gold in particular (six-year high) and ‘not-so’ bad economic data of late, is lending support to the CAD ‘bulls,’ who have been comfortable adding to their net ‘long’ CAD positions on any USD rally over the past fortnight.
The loonie is encroaching on some key resistance levels (USD support) at C$1.3150. A clear break with momentum certainly opens up the C$1.3075-1.3100 target range.
Expect USD ‘bears’ to look to Fed speak today for more support. Fed Chair Powell is due to speak about the economic outlook and monetary policy at the Council on Foreign Relations, in New York at 01:00 pm ET. Audience questions are expected.
Powell has come under strong pressure from U.S President Donald Trump to cut rates sharply. The market is looking for signs on how much U.S policymakers will cut rates by next month, particularly now that Trump has upped his criticism of the central bank, saying it “blew it” in June.
Also not helping the U.S dollars cause is the market does not seem that confident of a Trump/Xi Jinping trade break through at this week’s G20 gathering.