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Canadian wholesale sales rose 0.6% to $53.0 billion in June
Wholesale sales rose 0.6% to $53.0 billion in June, a third consecutive increase. Gains in five subsectors, which together represented 69% of wholesale sales, more than offset a decline in the motor vehicle and parts subsector. Excluding this subsector, wholesale sales rose 1.2%.
In volume terms, wholesale sales were up 0.7%.
Higher sales in five subsectors
The miscellaneous subsector, up $208 million or 3.1% to $6.9 billion, contributed the most in dollar terms to the gain in June. This was the sixth increase in seven months for the subsector. While all of the subsector's industries recorded higher sales, the agricultural supplies industry (+4.9%) and the other miscellaneous industry (+5.1%) were the largest contributors to the gain. The other miscellaneous industry includes wholesalers of logs and wood chips, minerals, ores and precious metals, and second-hand goods (excluding machinery and automotive goods), as well as wholesalers not elsewhere classified.
Sales in the building material and supplies subsector, up 2.2% to $7.6 billion, rose for a sixth consecutive month to the highest level on record. The largest contributor to the increase was the lumber, millwork, hardware and other building supplies industry (+3.7%), which posted a seventh consecutive monthly gain.
For the fourth time in five months, sales increased in the food, beverage and tobacco subsector, rising 1.5% to $10.4 billion in June. Higher sales in the food industry (+1.4%) and the cigarette and tobacco product industry (+3.9%) were the largest contributors to the increase.
The farm product subsector rose 1.4% to $672 million, its sixth increase in seven months. Despite the gain, the subsector remained below its historical peak from April 2014.
Following the strong gain in May, sales in the motor vehicles and parts subsector declined 2.4% to $9.1 billion in June. All of the subsector's industries contributed to the decline, led by the motor vehicle industry (-2.6%).
Sales up in seven provinces
Sales increased in seven provinces in June. Alberta contributed the most to the gain.
Sales in Alberta rose for a sixth consecutive month, up 2.0% to $7.1 billion. This was the highest level on record for the province. Gains were recorded in most subsectors.
In Ontario, sales edged up 0.3% to $25.6 billion in June, a third consecutive increase. Gains in several subsectors more than offset a decline in the motor vehicle and parts subsector.
Sales rose 13.1% to $438 million in Newfoundland and Labrador, more than offsetting the decline in May.
In Saskatchewan, sales rose 1.8% to $2.1 billion, a second consecutive increase. Higher sales in the farm product subsector contributed to the gain.
New Brunswick recorded a second consecutive sales increase, up 7.0% to $565 million. Led by the food, beverage and tobacco subsector, widespread gains across subsectors were recorded.
Manitoba and Prince Edward Island also recorded sales increases as a result of widespread gains across subsectors. Sales in Manitoba rose 2.3% to $1.5 billion, its highest level on record, while sales in Prince Edward Island rose 7.2% to $58 million following three consecutive monthly declines.
After three consecutive monthly gains, sales in British Columbia decreased 0.7% to $5.2 billion. Lower sales were recorded in several subsectors, led by motor vehicle and parts.
USD/CAD little changed after mixed Canadian data
The U.S. dollar was little changed against its Canadian counterpart on Friday, after the release of mixed Canadian data, as investors eyed an upcoming speech by Federal Reserve Chair Janet Yellen and renewed concerns over tensions in Ukraine lifted weighed on sentiment.
USD/CAD hit 1.0979 during European afternoon trade, the session high; the pair subsequently consolidated at 1.0946, easing up 0.06%.
The pair was likely to find support at 1.0890, the low of August 19 and resistance at 1.0986, Thursday's high and a more than three-month high.Official data showed that consumer price inflation in Canada fell 0.2% last month, compared to expectations for a 0.1% downtick, after a 0.1% rise in June.
Core CPI, which excludes the eight most volatile items, slipped 0.1% in July, confounding expectations for a flat reading, after a 0.1% dip the previous month.
A separate report showed that retail sales in Canada rose 1.1% in June, exceeding expectations for a 0.6% gain, after a 0.9% rise in May, whose figure was revised from a previously estimated 0.7% increase.
Core retail sales, which exclude automobiles, climbed 1.5% in June, more than the expected 0.4% rise, after a 0.3% gain in May whose figure was revised from a previously estimated 0.1% uptick.
Meanwhile, the greenback remained supported after a string of upbeat U.S. economic reports and the Fed's latest meeting minutes this week.
On Wednesday, the minutes of the Fed’s July meeting showed that some officials believe the strengthening recovery and ongoing improvement in the labor market supports a move towards tightening monetary policy.
Market participants were eyeing Ms. Yellen's comments at Jackson Hole later in the day for further indications on the central bank's next policy moves.
Separately, investors remained cautious after Ukraine declared on Friday that Russia had launched a "direct invasion" of its territory after Moscow sent a convoy of aid trucks across the border into eastern Ukraine where pro-Russian rebels are fighting government forces.
The loonie was steady against the euro, with EUR/CAD inching 0.02% higher to 1.4533.
Loonie Slumps as Greenback Dominates
The loonie fell on Friday, despite crude oil trading in the green. The dominance of the US dollar on currency markets was evident, with the dollar index gaining 0.45% and hovering at nine-year highs.
At the time of writing, the USD/CAD pair was up 0.4%, trading below $1.1670 and attempting to breach its 2014 highs at $1.1675.
Oil fell more than 50% in 2014, dragging the Canadian dollar lower, with broad greenback strength in the previous year also helping to undermine the loonie.
Investors are expecting a set of US manufacturing data later in the session. Markit will publish its manufacturing PMI, which is expected to print 54.0, up from last month's 53.7 and the Institute for Supply Management will release its manufacturing index, which is predicted to come down from December's 58.7 to 57.5.
"The US dollar is continuing to derive support from the relative outperformance of the US economy and building investor expectations of widening monetary policy divergence between the Fed and other major central banks," said analysts at Bank of Tokyo-Mitsubishi.
USD/CAD almost unchanged, near more than 5-year highs
The U.S. dollar was almost unchanged against its Canadian counterpart on Monday, hovering close to more than five-year highs as expectations for a U.S. rate hike this year continued to support demand for the greenback.
USD/CAD hit 1.1843 during early U.S. trade, the pair's highest since May 2009; the pair subsequently consolidated at 1.1781.
The pair was likely to find support at 1.1596, Friday's low and resistance at 1.1951.
Demand for the greenback broadly supported by the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan.
A recent string of upbeat U.S. data sparked optimism over the strength of the country's economic recovery and added to expectations for the Fed to soon raise interest rates.
The loonie was higher against the euro, with EUR/CAD retreating 0.80% to 1.4032.
The euro came under pressure after official data showed that German inflation slowed to the lowest level since 2009 in December.
German consumer price inflation accelerated at an annualized rate of 0.2% last month, below forecasts for 0.3% and slowing from 0.6% in November.
The data added to concerns over the risk of deflation in the euro area.
The single currency also weakened after European Central Bank President Mario Draghi said Friday the risk of it not fulfilling its mandate of price stability is higher now than six months ago.
The remarks indicated that the likelihood of full blown quantitative easing has increased ahead of the ECB’s meeting on January 22.
Canadian dollar reaches new lows – 3 reasons
The Canadian dollar is on the fall. After showing some resilience to the fall in oil prices, the recent round already found it vulnerable, yet slippery oil is not the only reason.
USD/CAD reached 1.1867 before settling around 1.1850. Can it attack 1.20? Here are three things weighing on the loonie:
- More falls in oil prices: Canada’s key oil exports are not all that matter for the economy, but certainly matter for the currency. The fall did not stop, with WTI settling around $47 and Brent oil dipping below this round number. Canada’s own oil prices are even lower.
- Stronger US figures: after some mediocre figures from the US at the wake of 2005, we had two positives: ADP NFP showed a gain of 241K jobs in the private sector, and the US trade balance deficit dropped below $40 billion in November. This supports the greenback across the board.
- Canadian trade deficit: Contrary to the US, Canada saw disappointing data from its trade balance: it slipped to negative territory with -0.6 billion, worse than 0.2 billion expected. In addition, October’s number was revised to a deficit.
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