Loonie up, March retail sales miss expectations, traders look to inflation data
TORONTO - The Canadian dollar closed higher Thursday amid a worse than expected showing in retail sales in March.
The loonie was ahead 0.18 of a cent to 91.8 cents US as Statistics Canada reported that sales actually fell 0.1 per cent in March to $41.1 billion, led by a decrease in the motor vehicle segment. Economists had expected a gain of 0.3 per cent.
The agency said that motor vehicle and parts dealers contributed the most in dollar terms to the March decline, with sales falling 0.7 per cent.
On Friday, markets will look to the latest Canadian inflation data and what effect the reading could have on the Bank of Canada's interest rate announcement in early June.
Economists expect the inflation data will show that the consumer price index rose two per cent year over year in April, up from the 1.5 per cent reading registered the previous month.
Meanwhile, Chinaâ€™s manufacturing contraction eased in May, as HSBCâ€™s preliminary purchasing managersâ€™ index rose to 49.7 from 48.1 in April. Numbers above 50 on the 100-point scale indicate expansion.
The HSBC reading follows a similar survey by an official group that had also been showing signs of a rebound in China, with factory activity growing weakly in April.
Analysts say that the improvements in both surveys suggest the Chinese governmentâ€™s targeted measures to support the economy are moderating the pace of the slowdown.
On the commodity markets, copper prices rose in the wake of the Chinese manufacturing data with the July contract up two cents to US$3.14 a pound.
June gold bullion gained $6.90 to US$1,295 an ounce and July crude lost 33 cents to US$103.74 a barrel.
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