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Canadian Dollar Flat As Retail Sales Collapse in April, Finds Support in Crude

June 19, 2020 at 16:33 by Andrew Moran

Canadian dollar bills in denominations of 100, 50, 20, and 10The Canadian dollar is trading relatively flat against many of its currency competitors to finish the trading week. The latest economic data showed just how severe the coronavirus pandemic lockdown was to the Great White North, but the increase in crude oil prices helped limit any of the loonie’s losses.

According to Statistics Canada, retail sales cratered 26.4% in April, worse than the median estimate of a 15.1% drop. Retail sales dropped 10% in March. April’s reading was the biggest downturn on record, led by declines in apparel (-84.8%), automobiles (-44.3%), gasoline stations (-32.2%), and food and beverage (-12.7%). There was a 56% jump in ecommerce sales as many retailers expanded their online presence and offered curbside pickup services.

On an annual basis, retail sales slumped at a record pace of 32.5%.

This comes soon after the statistics agency reported that the inflation rate fell at an annualized rate of 0.4%, and the core inflation figure rose 0.7%. Wholesale sales plummeted 21.6% in April, and new housing prices picked up 0.1%.

Should investors and consumers be bearish? Not all says Bank of Canada (BoC) Deputy Governor Larry Schembri. In his prepared remarks on Thursday, he noted that online job positions, confidence surveys, and mobility tracking all highlighted a significant recovery in the Canadian economy. In other words, April was the low point during the pandemic.

Rallying energy prices supported the loonie at the end of the trading week. July West Texas Intermediate (WTI) crude oil futures advanced $0.68, or 1.75%, to $39.52 per barrel. August Brent crude futures increased $0.58, or 1.4%, to $42.09 a barrel. Both WTI and Brent prices are poised for a weekly gain of 9% and 7%, respectively.

Oil remains Canada’s biggest export, so any significant movement in prices – high or – low can affect the national economy.

The USD/CAD currency pair rose 0.01% to 1.3603, from an opening of 1.3599, at 16:13 GMT on Friday. The EUR/CAD tumbled 0.08% to 1.5225, from an opening of 1.5239.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.