Canada’s retail sales rose 0.8% in October, a figure that matched expectations, and is the third month in a row that sales were positive. Consumer spending is important to the Canadian economy as Canadian exports are being pressured by a high Canadian Dollar. This month, sales were primarily boosted by auto sales as the core rate which excludes auto sales was up a smaller 0.2%. If consumers are willing to spend on expensive durable goods as cars, it means that confidence is rising, a plus for the Bank of Canada which is keeping interest rates at a very low 0.25%. Sales however have not rebounded to their pace seen one year ago, as sales fell 1.4% compared to last October.

From the Release: “Retail sales in current dollars rose 0.8% in October to $35.3 billion, the eighth gain in 10 months. Excluding the automotive sector, sales edged down 0.2%. In volume terms, retail sales increased 0.6% in October. The volume of retail sales has returned to a level last observed before the sharp declines in the last two months of 2008.

All components of the automotive sector (+3.0%) reported higher sales in October. Sales at new car dealers rose for the sixth consecutive month, gaining 3.6%. It was the first month where the value of sales at new car dealers was higher in 2009 than in 2008… Excluding the automotive sector, retail sales edged down 0.2% in October. Higher sales in five of the seven non-automotive sectors were more than offset by declines in the food and beverage (-1.2%) and pharmacies and personal care (-0.9%) sectors.”

USD/CAD: Loonie Strengthens on Higher Stocks, Commodities; Finds Support Near1.5050

The Canadian Dollar had strengthened vs the US Dollar prior to the US open, with the USD/CAD pair sliding from an intra-day high near 1.07 to test an upward sloping line of support near the 1.0550 level. The Loonie benefited from higher global stocks and commodity prices (oil and copper) which bolstered a sense of risk appetite in the pair. The retail sales report coincided with the test of support and the Canadian Dollar was not ready to push further despite a higher open in US stocks. At that point the USD/CAD pair retraced part of its losses, moving back to the 1.0610 area.

Here is a look at the pair in a longer time-frame, zooming out to show the last three weeks of activity. From this look we see that the pair is trading in an upward channel, with the pair rising from the 1.04 level to hit the 1.0750 region late last week, giving us our key levels of horizontal support and resistance.

Against the Euro, the Canadian Dollar hit a one-year high in today’s trading.