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Canadian Retail Sales Stop Consolidation

Market Analysis

AUDCAD, H4

Canada retail sales increased just 0.1% in June after a revised 0.5% gain in May (was +0.6%). The gain is smaller than expected (median +0.3%). A 1.4% decline in motor vehicle and parts dealers following a 2.3% gain in May drove total sales values lower in June. Hence, the ex-autos sales aggregate improved 0.7% in June after the 0.1% dip in May, leaving a much better than projected gain in June (median +0.1%). General merchandise sales gained a hearty 2.9% in June, building material and garden equipment sales were up 2.2% and clothing/clothing accessory store sales rose 2.7%. A 1.8% drop in gasoline station sales, which was led by lower prices, weighed on total and ex-auto sales. Total retail sales volumes grew 0.5% in June, which is roughly as anticipated. GDP is expected to hold steady (0.0%) in June relative to May following the 0.6% m/m surge in May.

On the announcement of the Strong Data, Loonie strengthed further against major Currencies. However, the AUDCAD gained my attention the most since after a consolidation of the pair seen since July 26, between 0.9920- 1.0000,  the pair felt to the lowest of the month, trading to 0.9904  from  0.9947.  In the 4-hour chart, the pair broke the 200-period MA and the support level of 0.9930. Meanwhile in the Daily chart, AUDCAD seems to present a Rounding Top in August, while the downtrend channel continues since year’s peak in May. Therefore a possible confirmation of this Rounding top suggests that weakness is like to be continue.

 

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Andria Pichidi

Market Analyst

HotForex

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