Release Explanation: Retail Sales are a very important set of figures that make up a large percentage of consumer spending numbers. Retail sales are the measure of the total sales of goods and services by retail stores. Service-based economies rely on the strength of the consumer to keep things moving along, this therefore impacts PCE and CPI, the Inflationary reports.
A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the economy.
Trade Desk Thoughts: According to Statistics Canada, price reductions were a key factor in the 0.9% drop in retail sales in October, with sales declining in six of the eight sectors. If price changes are factored in, retail sales in terms of volume were up 0.1%.
The sharpest decline in October was a 2.1% drop in sales by furniture, home furnishings and electronics stores, which posted its third decline in a row. The key contributor was furniture stores, whose 4.5% drop in sales was mainly influenced by a decrease in the price of furniture.
Sales in the automotive sector recorded a 1.5% decline in October, mainly attributable to a 4.0% drop in sales by gasoline stations, their strongest decline since August 2007. The decrease in sales by new car dealers only partly offset the sales gains posted in September. Sales increased for a third consecutive month for used and recreational motor vehicle and parts dealers (including tire dealers).
Sales by clothing and accessories, and general merchandise stores also fell by at least 1.0% in October. Despite these declines, sales in the general merchandise stores sector continued to follow an upward trend, while sales in clothing and accessories stores have remained relatively stable throughout 2008.
Sales rose 0.6% in the pharmacies and personal care stores sector in October, while they remained essentially unchanged in the food and beverage stores sector (+0.1%).
Forex Technical Reaction: Crude oil futures were little changed, up just 2 cents ahead of the NYMEX open. USD/CAD was also little changed on the day; the pair briefly rose immediately after the retail sales report, but found resistance in the 1.1960 area.