Retail sales for December in Canada were stronger than expected, but still dropped by 0.1 percent on a headline basis (expectations were for a drop of 0.3 percent). Excluding autos from the measure changes the results dramatically, bringing the sales growth down to -0.5 percent, weaker than the 0.3 percent drop expected. A large cause of the months drop is being blamed on the continuing fall of gasoline prices across the country. Overall, retail sales have been showing a weakening trend as higher borrowing costs and a weaker housing market are forcing consumers to hold onto their money.
Economic releases expected out of Canada this week will include consumer prices and an update on the January GDP picture for the country. As of today, economist expectation is for consumer prices to have increased by 0.2 percent and 1.5 percent on a month-over-month and year-over-year basis respectively for the month of January. In the United States we will see releases for wholesale inventories, housing starts, building permits, factory orders, annualized GDP and ISM manufacturing, among others.
Both US and Canada government yields are trading 1 to 2bps higher with S&P futures higher (+12.3). The Canadian dollar is trading flat against the US dollar this morning, today’s expected range is 1.3085 – 1.3185.