Today’s main North American macro risks will be Canadian Retail Sales at 8:30AM and US New Home Sales at 10:00AM. For CAD retail sales, the market is looking for 0.5% on headline and ex-auto vs. last month’s upside surprises of 1.3% and 1.0%.
Given the strong retail sales print in the US and rising Consumer Confidence in Canada, our bias is to the upside for today’s print. This is also in line with our economists’ forecast (0.6%). Our Canadian Economic Surprise Index is in positive territory for the first time since January, and the market may still be too bearish on the Canadian story in the short-term. With December’s retail sales print heavily impacted by the weather, January’s robust print may have been payback for the prior month’s weakness, and in part this may carry over into today’s print.