Canada’s Retail Sales Rise 0.8% to $69.8 Billion – Canadian Dollar Hits 7-Month High

Canada’s retail sales increased 0.8% to $69.8 billion in March, coming in warmer than expected and triggering a surge in the Canadian dollar to a seven-month high as the currency strengthened 1% against the U.S. dollar.

Canada’s Retail Sales Beat Expectations in March

Statistics Canada reported that retail sales rose 0.8% to $69.8 billion in March, helped by an increase in new car sales as Canadians looked to get behind a new set of wheels before tariffs started to raise prices.

TD Bank economist Marc Ercolao said the March Canada’s retail sales data came in a bit warmer than expected. “Consumers pulled forward their auto purchases, something we expected as buyers front-ran counter tariffs imposed in April,” Ercolao wrote in a report.

Broad-Based Growth in Canada’s Retail Sales Components

The strength in retail sales wasn’t limited to automotive purchases. Ercolao noted that five of seven non-auto retail components advanced on the month, which may represent stockpiling of non-discretionary items ahead of other incoming tariffs.

Key details from retail sales report:

• Motor vehicle and parts dealers gained 4.8%
• New car dealers rose 5.2%
• Used car dealers gained 2%
• Building material and garden equipment dealers rose 2.6%
• Clothing, accessories, shoes, jewelry, luggage and leather goods retailers gained 2.6%
• Six of nine subsectors showed increases

The increase for motor vehicle and parts dealers was the first move higher in three months for the subsector.

Core Canada’s Retail Sales Show Moderate Growth

Core Canada’s retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — rose 0.2% in March. In volume terms, overall retail sales increased 0.9% for the month.

April Preliminary Estimate Shows Continued Momentum

Statistics Canada’s preliminary estimate for April also pointed to an increase of 0.5% for Canada’s retail sales in that month, though the agency cautioned the figure would be revised.

Economist Commentary on Canada’s Retail Sales Performance

BMO’s senior economist, Shelly Kaushik, noted that despite fluctuations caused by tariffs and energy prices, the March retail sales report still reflected solid underlying performance. “The flash estimate points to some firmness in April, but the longer the trade war goes on, the more it will weigh on sentiment and spending,” Kaushik wrote in a report.

Canadian Dollar Surges Following Strong Retail Sales Data

The Canadian dollar strengthened to a seven-month high against its U.S. counterpart on Friday as the greenback posted broad-based declines and domestic Canada’s retail sales data supported bets that the Bank of Canada would remain on the sidelines.

Currency movement details:

• The Canadian dollar climbed 1% to trade at 1.3712 against the U.S. dollar, equivalent to 72.93 U.S. cents.
• Highest intraday level since October 10.
• This rise extended the loonie’s winning streak to five consecutive days.
• Longest run since June
• Weekly gains of 1.8%

Technical Trading Action Following Retail Sales Release

The move began “snowballing” after USD-CAD triggered stop-loss orders below the May 6 low at 1.3748. The U.S. dollar tumbled against a basket of major currencies and the price of oil, one of Canada’s major exports, gained 0.6% to $61.58 a barrel.

Pre-Tariff Consumer Behavior Impact on Retail Sales

The March Canada’s retail sales data revealed clear evidence of consumers timing purchases strategically:

• Auto purchases were pulled forward before tariffs raised prices
• Non-auto components showed strength possibly due to stockpiling ahead of incoming tariffs
• Consumer behavior shifted to front-run counter tariffs imposed in April

GDP Data Context

The retail sales data comes ahead of Statistics Canada’s reading for gross domestic product for March and the first quarter as a whole on May 30.

Bank of Canada Policy Implications

The upbeat Canada’s retail sales data supported market expectations that the Bank of Canada would remain on the sidelines, contributing to Canadian dollar strength as investors reduced bets on policy changes.

Conclusion: Strong Retail Sales Drive Currency Gains

Canada’s retail sales rose 0.8% to $69.8 billion in March, coming in warmer than expected and demonstrating consumer resilience despite trade tensions. The broad-based strength across retail sectors, combined with preliminary April estimates of continued growth, supported significant Canadian dollar appreciation to seven-month highs.

H2T Finance’s latest update in the Breaking News section highlights that Canada’s retail sales data revealed strategic consumer behavior, with buyers front-running tariff implementations. Meanwhile, the currency market response reflected growing confidence in the domestic economy and lowered expectations for any immediate policy moves from the Bank of Canada.

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