USDCAD, H1
USDCAD rallied to a better than one-month high of 1.3109 from near 1.3040 following the cooler Canada CPI numbers, and weak retail sales outcome. The pairing had faded to 1.3028 lows overnight on firmed Oil prices, but the data obviously trumped market sentiment.
Canada’s CPI grew at a 2.2% y/y pace in September, undershooting expectations for a modest dip (median +2.7%) following the 2.8% pace in August and cycle high 3.0% pace in July. CPI dropped 0.4% (m/m, nsa), contrary to expectations (median +0.1%) after the 0.1% decline in August. The Core CPI measures edged lower in September: CPI-trim to 2.1% from 2.2%, CPI-median to 2.0% following a 2.1% gain in and CPI-common to 1.9% from 2.0%.
Canada retail sales values dipped 0.1% in August after a revised 0.2% gain in July (was +0.3%). The retail sales ex-autos aggregate fell 0.4% in August following a revised 0.8% increase in July (was +0.9%). The declines in total and ex-autos retail sales were contrary to projections for at least modest gains in both. Total sales volumes declined 0.3% in August.
While CPI and retail sales were surprisingly soft relative to expectations, these report do not alter the strong case for a 25 bp rate hike from the Bank of Canada next week. The rapid slowing in total CPI growth back towards 2% y/y from 3% y/y realizes the BoC’s expectations that the pop higher to a 3% y/y CPI growth pace in July was due to temporary factors. The core CPI measures remain consistent with an economy operating around potential. Even if the data does not alter a rate hike for BoC, the inflation report supports the possible scenario to a gradual approach to normalising rates.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.