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    Canada: Setting up for retail sales (April) - TDS

    Research Team at TDS, suggests that a number of factors will come together to support our above consensus 1.2% monthly increase in April retail sales.Key Quotes“Industry reports, noting another strong month for auto sales, are expected to help this sector rebound from the anomalous decline noted in the March report. This will translate to a more subdued increase in the ex-autos metric of 0.8% m/m. A similar rebound dynamic is expected for the home furnishings component given the continued momentum in existing home sales.A sizable jump in the price at the pump will also provide a lift to sales at gasoline stations. The influence of higher prices will curtail the volumes metric, though the retail sector is expected to provide a solid contribution to industry-level real GDP ahead of the distortion caused by the wildfires in Northern Alberta in the month of May.CADWithin the FX market, all eyes remain focused on the upcoming UK Referendum vote. CAD remains one of the most risk sensitive currencies in the G10. We think this keeps CAD beholden to global risk events with local data taking a back seat for now. Even so, the momentum has gradually shifted to the remain camp, underscoring the improvement in risk appetite and weighing on the USD.With TD above consensus on the headline retail print, we suspect the combination of a stronger headline release and supportive risk markets suggest further upside in CAD. Our high-frequency models point to a level near 1.28 so we like scaling back into long USD positions near 1.2650.”


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