Release Explanation: Retail Sales are a very important set of figures that make up a large percentage of consumer spending numbers. Retail sales are the measure of the total sales of goods and services by retail stores. Service-based economies rely on the strength of the consumer to keep things moving along, this therefore impacts PCE and CPI, the Inflationary reports.

A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the economy.

Trade Desk Thoughts: According to Statistics Canada, retail sales rose 1.9% in January after decreasing 5.2% in December. Sales rose in five of the eight retail sectors, led by a 3.8% increase in the automotive sector. In volume terms, retail sales were up 1.8%.

When adjusted for inflation, sales have decreased by about 7% from the peak in September 2008.

The main contributor to the increase in the automotive sector in January was a 6.4% rise in the value of sales at new car dealers, following a 15.1% decline in December. January's gain reflects a higher number of new motor vehicles sold, according to the New Motor Vehicles Sales Survey. Sales at gasoline stations rose 2.6%, while used and recreational motor vehicle and parts dealers registered a 1.8% decline.

The two sectors where January's increases more than offset December's declines were food and beverage stores (+2.1%) and pharmacies and personal care stores (+2.0%). These stores mainly sell products (such as food and prescription drugs) whose consumption is less discretionary than other goods sold by retailers such as automobiles and furniture.

Two sectors registered sales declines in January. Sales at building and home supplies stores fell 1.4%, reflecting in part a continued slump in the housing market. Sales at furniture, home furnishings and electronics stores were down 0.7%.

Forex Technical Reaction: Crude futures were recently lower by about 90 cents on the session, but the cad (USD/CAD) was slightly lower on the day.