One of the big FX moves in the fourth quarter was in USD/CAD as Canadian and American fortunes diverged. The Bank of Canada cut significantly again in December and the market is 50/50 for a cut in January even when the Fed moves to the sidelines.
Today is an important data point with retail sales due at the bottom of the hour.
RBC is out with its latest charges administrator and the signs are not good.
Our data with RBC credit cardholders shows that Canadians stopped short of selective goods (including home-related products and electronics) and selective services (such as health and fitness and home services) after a stronger spending month in October. Restaurant sales were the furthest out – holding up until November.
The amount of consumption of discretionary goods fell by 0.9% and discretionary services rose by 0.2% m/m.
The drop comes after a better start in Q4 which puts it on track to be a strong quarter but the trend is not good.
“Holiday spending was slightly below (-1.1%) 2023 levels over the Black Friday weekend (from the night before Black Friday to Cyber Monday). Overall, holiday spending was 2 % lower than a year ago in November.”
The caveat here is that Canada started a two-month GST holiday (VAT Canada) on December 14th so some charges may have been pushed back. Canadians were also dealing with a postal strike in November and early December.
