TheNews

Trading the News: Canada Retail Sales

A 0.8% rebound in Canada Retail Sales may heighten the appeal of the loonie and spark a near-term decline in USD/CAD as it boosts the outlook for growth and inflation.

What’s Expected:

Why Is This Event Important:

The Bank of Canada (BoC) may largely endorse a wait-and-see approach throughout the remainder of the year as Governor Stephen Poloz turns upbeat towards the economy, and the central bank may gradually move away from its easing cycle after implementing the ‘insurance’ rate-cuts in 2015.

How To Trade This Event Risk

Bullish CAD Trade: Retail Sales Rebounds 0.8% or Greater

• Need to see red, five-minute candle following the release to consider a short trade on USD/CAD.
• If market reaction favors a bullish loonie trade, sell USD/CAD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish CAD Trade: Canada Household Consumption Disappoints

• Need green, five-minute candle to favor a long USD/CAD trade.
• Implement same setup as the bullish Canadian dollar trade, just in reverse.

Potential Price Targets For The Release
USD/CAD H4



Canada Retail Sales slumped 1.0% in March after expanding a revised 0.6% during the previous month. A deeper look at the report showed demand for furniture & home furnishings declined 3.7% to lead the decline, with food & beverage sales contracting 0.4%, while discretionary spending on clothing and accessories increased 0.8% during the same period. The Canadian dollar struggled to hold its ground following the weak consumption report, with USD/CAD climbing above the 1.3100 handle to end the day at 1.3107.


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