Canada’s retail sales increased by 1.3% in November, surpassing expectations of a 1.2% rise. This growth reflects a positive trend in the retail sector for that month.<\/p>\n
Analysts had forecast a smaller increase, but the actual figures showed stronger consumer spending. This development could influence economic assessments and future predictions.<\/p>\n
The retail sales data from last November, which showed a 1.3% increase, confirmed the consumer was stronger than we thought heading into the end of 2025. This signal of economic resilience, while old, sets a specific tone for interpreting new data. It suggests an underlying momentum that may still be present in the economy.<\/p>\n
This view is supported by the more recent jobs report for December 2025, which showed the Canadian economy added a surprisingly robust 45,000 jobs, keeping the unemployment rate steady at 5.8%. More importantly, wage growth in that report remained firm at over 4.5% year-over-year. This combination of spending and a tight labour market points to persistent inflationary pressures.<\/p>\n
Given this, the Bank of Canada will be less inclined to signal any rate cuts at its meeting next week. We should anticipate a hawkish hold, meaning interest rates will likely stay elevated for longer than the market was pricing in a month ago. Consequently, we are adjusting positions in CORRA futures to reflect a lower probability of a rate cut before the summer.<\/p>\n
This expectation should provide support for the Canadian dollar. A Bank of Canada holding firm while other central banks contemplate easing creates a favourable interest rate differential. We see value in options that will profit from the USD\/CAD exchange rate moving lower, towards the 1.3300 level, in the coming month.<\/p>\n
For equity markets, this scenario creates a mixed picture. While strong consumer activity is good for retail and financial stocks, the prospect of higher-for-longer interest rates could put pressure on the broader S&P\/TSX 60 index. We are considering strategies that hedge against broad market downside while maintaining exposure to consumer-focused sectors.<\/p>\n
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