Canada\u2019s retail sales excluding autos increased 0.1% month on month in April, undershooting the 0.7% consensus forecast. The gap points to weaker momentum in core consumer spending for the period, compared with market expectations.<\/p>\n
The April reading follows a softer-than-anticipated monthly performance and may feed into updated assessments of near-term domestic demand conditions. With the actual print at 0.1% versus an expected 0.7%, attention is likely to turn to subsequent data for confirmation of whether this was a one-off slowing or part of a broader trend.<\/p>\n
The April retail sales data, showing a mere 0.1% growth excluding autos, confirms our view that the Canadian consumer is losing momentum. This figure, missing the 0.7% forecast by a wide margin, points to a broader economic slowdown. We see this as a clear signal that the Bank of Canada’s previous rate hikes are having a significant cooling effect on demand.<\/p>\n
We believe the Canadian dollar is particularly vulnerable, so we are looking at bearish positions through options or by buying USD\/CAD futures. With the U.S. economy showing more resilience, the policy divergence between the Bank of Canada and the Federal Reserve is likely to widen. Historically, periods of Canadian economic underperformance relative to the U.S., such as in 2015, have led to sustained weakness in the loonie.<\/p>\n
The market is likely underpricing the probability of a Bank of Canada rate cut before the end of the year, creating an opportunity in interest rate derivatives. The latest Statistics Canada report showed May’s inflation rate cooled to 2.6%, and this weak retail data strengthens the case for easing. We are considering buying Canadian bond futures (BAX contracts) to profit from a potential drop in short-term interest rates.<\/p>\n
For the S&P\/TSX Composite Index, we anticipate increased volatility and a defensive rotation. While consumer discretionary and retail stocks face headwinds, rate-sensitive sectors like utilities and REITs may find support from the prospect of lower borrowing costs. We are buying put options on consumer-focused ETFs as a direct play on this specific weakness.<\/p>\n","protected":false},"excerpt":{"rendered":"
Canada retail sales ex-autos rose 0.1% in April, far below 0.7% forecast, signaling slowing demand.<\/p>\n","protected":false},"author":25,"featured_media":47978,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[24],"tags":[],"class_list":["post-49554","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/49554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/comments?post=49554"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/49554\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media\/47978"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=49554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=49554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=49554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}