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    Retail sales in Canada increased by 1.3% month-on-month, surpassing the expected 1.2% growth.

    by VT Markets
    /
    Jan 23, 2026
    Canada’s retail sales rose by 1.3% in November, exceeding the expected 1.2% increase. This growth shows a positive trend in the retail sector for that month. Analysts predicted a smaller rise, but actual spending by consumers was stronger than anticipated. This could impact economic evaluations and future forecasts.

    Retail Sales Show Economic Strength

    The retail sales data from last November, with a 1.3% increase, indicates that consumer strength was underestimated as we approached the end of 2025. This sign of economic resilience, although dated, shapes our understanding of new data. It hints at a steady momentum still present in the economy. Supporting this view, the recent jobs report for December 2025 showed the Canadian economy added a surprising 45,000 jobs, keeping the unemployment rate stable at 5.8%. More importantly, wages grew by over 4.5% year-over-year. This combination of increased spending and a tight job market suggests ongoing inflationary pressures. As a result, the Bank of Canada is likely to avoid signaling any rate cuts at its meeting next week. We expect a cautious stance, meaning interest rates will probably remain high longer than the market anticipated a month ago. Therefore, we’re adjusting our positions in CORRA futures to reflect a lower chance of a rate cut before summer.

    Effect on Currency and Markets

    These expectations should bolster the Canadian dollar. If the Bank of Canada maintains its stance while other central banks consider easing, it creates a favorable interest rate differential. We see potential in options that could profit from the USD/CAD exchange rate decreasing to around the 1.3300 mark in the coming month. For equity markets, this situation presents a mixed outlook. Strong consumer activity is beneficial for retail and financial stocks, but the possibility of sustained high interest rates may pressure the broader S&P/TSX 60 index. We are exploring strategies to hedge against broader market declines while still being exposed to consumer-focused sectors. Create your live VT Markets account and start trading now.

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