Canada: Upside surprise in retail sales and CPI - TDS
|Analysts at TD Securities note that Canadian retail sales and CPI both surprised to the upside, with the former up 2.0% m/m on a rebound from weather-related weakness while inflation picked up to 2.5% y/y, the highest since 2012, as core measures firmed.
Key Quotes
“We still expect the economy to slow into H2 but with Q2 GDP tracking near 3%, we are performing at or slightly above the BoC's projections. Today's data should be seen as incrementally raising the risk of an October hike.”
“FX: USDCAD appreciably dipped on the data surprise. The move was also exacerbated by Trump's latest anti-strong USD rhetoric. The latter may prove fleeting however.
We remain cautious on CAD, as the rates market is firmly biased for additional tightening by year-end (leaving less room for CAD appreciation) and trade tensions remain a notable factor for its prospects going forward.”
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