Canada’s wholesale sales rose by 1.9% month on month in March. The market expectation was 1.4%.
The March reading was 0.5 percentage points above expectations. This indicates faster growth in wholesale sales than forecast.
The March wholesale sales number, coming in at 1.9%, is another sign that the Canadian economy has more momentum than anticipated. This surprising strength gives the Bank of Canada (BoC) less justification to consider cutting interest rates in the near term. This result builds on the latest jobs report from Statistics Canada, which showed the economy added a solid 41,000 jobs in April, holding the unemployment rate at 6.1%.
Given this backdrop, we see the derivatives market continuing to price out the probability of a rate cut at the BoC’s July meeting. Traders should consider positions that benefit from stable or higher Canadian interest rates, such as selling call options on Bankers’ Acceptance futures (BAX). This strategy profits if the market’s expectation for future rate cuts diminishes further.
This economic resilience makes the Canadian dollar more attractive, especially as the US Federal Reserve signals a patient stance. We see potential in buying call options on the CAD/USD pair or, for a more common trade, purchasing put options on USD/CAD targeting a move towards the 1.3450 level. Looking back, we saw a similar dynamic in the second half of 2025 when strong Canadian data led to a sustained period of loonie outperformance.
The underlying economic strength is also a positive signal for Canadian corporate earnings, particularly for banks and resource companies sensitive to domestic demand. We believe buying call options on the S&P/TSX 60 index, perhaps with a July expiry, is a sensible way to participate in potential stock market upside. This approach provides exposure to a broad market rally while strictly defining the risk involved.
