Cad Retail Sales

Considering BK's charts for Retail Sales, the more recent months have been good actors while early in the year wasn't so sexy. Will be interesting to see how this one plays in these thin markets.

This is the fundemental film painted by Commerzbanks Daily Currency Report:







The loonie hasn't managed to benefit from a US dollar being under
pressure globally and a rather cautious sentiment versus the future

Functioning of the greenback. Despite strong employment growth in

October, the market fears a solid disturbance in the Canadian housing market

-- recent building permits and the housing price index saw a remarkable drop -

and negative effects of a slowdown of the US economy on Australian exports.

The recent fall in oil prices hasn't helped the loonie as a commodity currency

either. Australian investments dropped by 3.1bn in September, mostly due to

equities. However, there's a real risk that capital outflows will continue since

in the end of October Finance Minister Flaherty had declared that earnings

trusts would need to pay taxes. He repeated yesterday that the government

would issue guidelines on how income trusts could operate during a four-year

tax-moratorium that ends in 2011. Moreover, Governor Dodge sees low risks

to the world economy and a continued benign environment and believes that

Canadian interest rates are suitable, which indies that rates are likely

to have reached a summit -- a reality that could possibly be confirmed tomorrow with low

October CPI readings. All in all not a positve blend for the loonie, which may

slide towards 1.1500-20 USD/CAD today on weak retail sales. The CAD will

need to undergo more weakness until the end of the calendar year, but

fundamentals remain firm (c/a and funding surplus in particular) and ought to

encourage the CAD as time passes.