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Canada’s retail sales likely to have rebounded in January on solid motor vehicle sales

Canadian retail sales data for the month of January is set to release tomorrow. According to a TD Economics research report, the retail sales are likely to have rebounded by rising 0.4 percent, driven by strong motor vehicle sales. In the prior month widespread softness had weighed on the sector. Motor vehicle sales are expected to have benefitted from warm weather throughout most of the nation alongside a rebound in consumer sentiment; this should leave ex-auto sales to come in at a more modest 0.2 percent rise.

Looking past motor vehicles the picture is mixed. Strong labor market gains are likely to have helped underpin consumer spending, but one month of positive home sales is not expected to have driven a recovery in demand for home furnishings given the wider trend, and a recent deceleration in residential construction will be a drag on building materials.

Lower prices in gasoline might have also been a headwind to nominal sales, although the positive impact on real incomes gives a silver lining from the cumulative 25 percent fall since October.

“Overall we expect real retail sales to come in at or slightly above the nominal print owing to a decline in seasonally adjusted goods prices during the month”, added TD Economics.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bearish at -135.723 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -13.296 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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