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Canadian dollar declines as wholesale sales disappoint

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Canadian dollar declines as wholesale sales disappoint

The Canadian dollar weakened Tuesday after wholesale sales unexpectedly declined in March following two consecutive months of gains.

Canadian wholesale sales declined 0.4 percent to $50.5 billion in March, following a gain of 1.1 percent the prior month, Statistics Canada reported today in Ottawa. Economists forecast a gain of 0.4 percent.

Excluding motor vehicle and parts, wholesale sales climbed 0.1 percent to $42.3 billion.

Sales volume, a figure used by economists to calculate gross domestic product, declined 0.2 percent in March. Sales volume was up 0.8 percent in February, the biggest monthly gain since July 2013.

Sales tumbled in three of the seven wholesale sub-sectors, which together account for more than half of wholesale sales. Motor vehicles and parts recorded the largest decline in March, falling 3 percent to $8.1 billion. That was the lowest level since September 2012, official data showed. The motor vehicle industry, which saw sales fall 4.4 percent, was responsible for the decrease.

The machinery, equipment & supplies sub-sector declined for the third time in four months, falling 1.4 percent to $10.6 billion.

Sales in the personal & household goods sub-sector declined 1.5 percent to $7.2 billion, official data showed.

Higher sales were recorded in the food, beverage & tobacco sub-sector. Sales in this sub-sector rose for the fifth time in six months, advancing 1.2 percent to $10.1 billion.

The Canadian dollar fell sharply in the early North American session, declining 0.27 percent to 0.9173 US.

Last week the loonie reached 92 US cents for the first time since the beginning of the year amid stronger than forecast housing data and a weak US dollar.

StatsCan will report on retail revenues later in the week. Canadian retail sales likely advanced 0.3 percent in March, according to estimates. Excluding automobiles, retail sales advanced 0.4 percent.

StatsCan and the Bank of Canada will close out the week with reports on consumer inflation. Canada’s consumer price index advanced 2 percent year-on-year in April, according to a median estimate of market analysts. The so-called core measure is expected to have risen 1.4 percent over the previous year.

In the United States, same-store retail sales increased 1 percent last week, according to the Johnson Redbook Index. Year-on-year, retail sales advanced 3.9 percent.

The US dollar will be put to the test Wednesday when the Federal Reserve releases the minutes of last month’s policy meetings. The minutes will be closely monitored for clues about the direction of monetary policy, especially around interest rates. The central bank decided at the April 29-30 policy meetings to shave another $10 billion from its monthly asset purchasing, disregarding the economy’s broad slowdown in the first quarter.

The US economy expanded 0.1 percent in the first three months of the year, according to initial government estimates, although latest data suggest that figure will be revised to reflect contraction. The government’s revised estimate will be released May 29.

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