Sceptics regarding a potential key rate increase south of the border got new arguments to bolster their case yesterday further to another month of disappointing Retail Sales numbers. Not only did the reading fail to meet expectations once again, (-0.3% vs. -0.1%), the data for the previous month was also revised downward. Given that over the past decade, consumer spending has been responsible for more than 80% of U.S. GDP, all signs point to some measure of slowing in the economy. In its Beige Book, the Fed refers to the growth seen in 6 of its 12 districts as modest. These facts notwithstanding, the United States on the whole is still on a better footing than many other economies.
Closer to home, Canadian oil producers are still not out of the woods, as their credit facilities have been cut by lenders reducing the value of their oil reserves. According to a survey by Moody's, close to a third of producers anticipate less short-term financing, which is likely to add to economic troubles.
For the time being, despite declining crude oil prices, the CAD is benefiting from the downward pressure on the greenback, creating opportunities.
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