Canada's retail sales increased 0.6% in June, ahead of the 0.4% estimate, according to figures from Statistics Canada, the national statistical agency that publishes the country's Monthly Retail Trade Survey. The prior month's result was revised higher, from an initially reported +1.0% to +1.1%.

The monthly retail trade report is one of the main barometers of Canadian consumer spending, which accounts for more than half of the country's economic output and is a key input the Bank of Canada tracks when setting interest rates. Retail sales also feed into Statistics Canada's quarterly GDP calculations, which is why the release is closely watched by economists and currency markets.

The agency's advance indicator for July points to a further 0.8% increase. That early estimate is drawn from a preliminary subset of retailers and is subject to revision when the final July figures are published.

Headline figures

• Retail sales, June: +0.6% vs 0.4% estimate
• Ex-autos, June: +0.5% vs 0.4% estimate; prior was +1.2%
• In volume terms, retail sales were up 1.5% in June
• Retail sales were up 2.2%, with volume sales up 0.4%

Sector detail

Core retail sales — which exclude motor vehicle and parts dealers as well as gasoline stations and fuel vendors — rose 1.2% in June, the second consecutive monthly gain.

• General merchandise retailers: +2.7%
• Clothing, accessories, shoes, jewelry, luggage and leather goods retailers: +3.1%
• Food and beverage retailers: -0.4%, the only decline within core retail sales
• Supermarkets and other grocery retailers: -0.6%, after +0.8% in May
• Motor vehicle and parts dealers: +1.0%, a third consecutive monthly gain
• New car dealers: +1.5%
• Used car dealers: -2.4%
• Gasoline stations and fuel vendors: -4.1%; sales volumes rose 4.2%

The split between value and volume is a defining feature of this report. Gasoline stations posted a 4.1% decline in dollar terms even as volumes rose 4.2%, a combination that reflects lower prices at the pump rather than reduced purchases. The same dynamic appears in the headline figures: with dollar sales up 0.6% and volumes up 1.5%, the gap points to lower average prices across the retail sector.

Provincial breakdown

Retail sales increased in 7 provinces.

• Ontario: +1.6%; Toronto: +3.9%
• Quebec: +0.5%; Montréal: +1.0%
• Alberta: -1.3%, the largest provincial decline

Market reaction

USD/CAD — the exchange rate expressing how many Canadian dollars one US dollar buys — traded 0.30% lower on the day at 1.3744, down from a high of 1.3908 reached earlier in the week on Tuesday/Wednesday. A lower reading in the pair corresponds to a stronger Canadian dollar, so the day's move left the loonie firmer against its US counterpart.

On a technical basis, the price moved sharply away from the 100-day moving average at 1.39137 and tumbled below the 200-day moving average at 1.38465. The price now sits below the swing area between 1.3766 and 1.3778, which stands as a close resistance level for traders.

Source: ForexLive