It came as quite a surprise when the Retail Sales reading for October showed growth of 1.5% compared to a forecast number as low as 0.3%! The strong showing no doubt contributed to a return to inflation in November, which saw a 2.1% jump instead of the expected 2.0%. Not surprisingly, the loonie reacted very positively to the news, shooting up more than 100 points immediately following the announcement. As a result, markets are now swinging in favour of a Canadian key rate increase on Jan. 17, which is now priced at a 60% likelihood.
Time off for the holidays will have to wait just a little bit longer, as we have a full day of economic indicators. On the menu, Canadian GDP for October and U.S. Personal Income and Personal Spending data, Durable Goods Orders and New Home Sales. Only then, can we really kick back and get in the holiday spirit.
Yusuf Kocagozli
Range of the day: 1.2650 – 1.2800