Loonie Slides As Canada Inflation Holds Steady, Retail Sales Drop Unexpectedly
June 22 2018 - 4:56AM
RTTF2
The Canadian dollar weakened against its major counterparts in
the European session on Friday, as Canadian retail sales fell
unexpectedly in April and inflation steadied in May, paring hopes
for a Bank of Canada rate hike this year.
Data from Statistics Canada showed that consumer prices edged up
0.1 percent on a seasonally adjusted monthly basis in May, the same
rate as seen in the previous month.
The rate was expected to rise to 0.4 percent.
Core inflation slipped 0.1 percent on month, after a flat
reading seen in the previous month.
Separate data showed that retail sales declined in April,
primarily due to lower sales at motor vehicle and parts
dealers.
The retail sales fell 1.2 percent on month in April, following a
revised 0.8 percent growth in the previous month.
Economists had expected sales to be flat.
Core retail sales fell 0.1 percent following a revised flat
reading last month.
Core retail sales have been expected to climb by 0.5
percent.
The currency showed mixed trading against its major counterparts
in the Asian session. While the loonie rose against the greenback
and the yen, it fell against the euro and the aussie.
The loonie declined to 0.9933 against the aussie, its lowest
since June 6. The next likely support for the loonie is seen around
the 1.01 level.
Having advanced to 1.5434 against the euro at 9:45 pm ET, the
loonie reversed direction and fell to near a 2-month low of 1.5584.
On the downside, 1.57 is possibly seen as the next support level
for the loonie.
Flash data from IHS Markit showed that the euro area private
sector expanded at a faster pace in June.
The composite output index rose unexpectedly to 54.8 in June
from 54.1 in May. The score was forecast to fall to 53.9.
Pulling away from an early high of 83.04 against the yen, the
loonie weakened to a 2-1/2-month low of 82.26. The loonie is seen
finding support around the 80.5 region.
The loonie reversed from an early 3-day high of 1.3263 against
the greenback, falling to a 1-year low of 1.3382. Next key support
for the loonie is likely seen around the 1.35 level.
Data from the Ministry of Internal Affairs and Communications
showed that Japan consumer prices rose 0.7 percent on year in
May.
That exceeded estimates for an increase of 0.6 percent, which
would have been unchanged from the April reading.
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