Canadian Retail Sales Down

Canada released the country’s retail sales for December 2011, reporting sales edged down by a seasonally adjusted 0.2% to $38.6 billion. Decline was largely due to lower sales in motor vehicle and parts that went down by 1.0% while volume remained stable. Increases were contributed by food and beverage stores who added 1.2% to their sales numbers while the majority of the additions (1.0%) were provided by supermarkets and other grocery stores. Stores associated with holiday shopping performed fewer sales in December including general merchandise (department) stores lowered by 1.1%, sporting goods, hobby, book and music stores decreased 3.4%, electronics and appliance stores reduced 2.8%, and clothing and accessory stores depreciated 0.8%.

For the year, retail sales amounted to $454.1 billion worth of products and services. This is 3.6% more form the previous year (2010) while retail volume also increased 1.6%. Motor vehicle and parts stores raised their sales 4.8% in the year.

In other news, the Office for National Statistics reported the United Kingdom had a budget surplus of £11.8 billion in January 2012, £2.5 billion more than January 2011. Additionally, net borrowing for the same period amounted to £7.8 billion, £2.5 billion lower from January 2011. Finally, the region’s net debt came to £988.7 billion during the month, while the same month last year came to £869.1 billion (58.3 per cent of GDP). The recent amount approximated 63.0% of gross domestic product. This was the largest budget surplus posted by the government in four years. Today’s data release will provide some relief to supporters of U.K.’s austerity measures.

The GBPCAD has been trading in a range between 1.5600 and 1.5800 and expect the pair to continue to do so because of the weakness in the U.K and Canadian economy.  The GBPCAD has failed to break below the 200 period moving average. We expect the pair to test support at 1.5600 if it breaks below the 200 period moving average.

Eugene Ross, Analyst

Admiral Markets

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