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USD/CAD Continues the Downtrend, As Canadian Retail Sales Remain Impressive

Posted Friday, May 21, 2021 by
Skerdian Meta • 2 min read

USD/CAD has been on a bearish trend for more than a year, losing more than 26 cents from top to bottom. The USD decline, coupled with increasing Oil prices have been keeping this pair bearish, with retraces higher being very weak and short-lived.

We have been selling the retraces up, mainly against moving averages. Earlier today we saw an attempt for another retrace up, but that was quite weak, ending at the 20 SMA (gray) and the bearish trend resumed again.

USD/CAD Live Chart

USD/CAD

The retail sales report for March from Canada was positive again, showing that this year the situation is much better, despite the restrictions in the country. So, the decline continues here and we will try to sell retraces higher whenever we see one.

Canada March 2021 Retail Sales Report

March retail sales +3.6% vs +2.3% expected
February sales were +4.8% (revised to 5.8%)
Estimates ranged from +2.3% to +3.6%
Statistics Canada advance estimate for March was +2.3%
Core retail sales ex autos +4.3% vs +2.3% expected
February core sales were 4.8% (revised to 5.6%)
Sales up in 10 of 11 sub-sectors
April advance estimate m/m -5.1% (based on 46% of responses)
Sales rose 1.8% in Q1
Building material and garden equipment and supplies dealers +19.8% due to better spring weather
Clothing and accessories +23.6%
Food and beverage stores -1.3% led by grocery stores
Full report

April was locked down heavily in much of Canada and continues to be so, but retail sales were curbed. It’s tough to guess what was expected in the month but -5.1% isn’t that bad considering the severity of the lockdown.

Expect that March will be the high water mark at least until June. It’s a tough time to trade this report because you don’t know what represents unanticipated demand and what is lockdown-related. Notably, clothing sales have been extremely strong in a number of countries after being extremely depressed throughout the pandemic. There’s an investing idea there.

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