A key survey from the Bank of Canada showed a sharp slowdown in a downcast report for the Canadian economy. Euro briefly dropped below 1.13 on reports that some ECB officials disagree with the assessment for an H2 growth rebound. GBP little changed after UK earnings data met expectations at a solid 3.5% y/y. March US industrial production is up next, expected +0.2% from unchanged. The Silver long was stopped out.  Global indices resume their upside, with DOW30 retesting the 26530/50 cyclical top.

A big surprise in Q1 economic data has been the strength of Canadian economic data but that raises as many questions as it answers.

CAD Data vs Loonie Reality

The loonie is the second-best G10 performer this year (after GBP), but that requires some perspective. It's up about 2% year-to-date against the US dollar, while in Q4 alone it fell more than 6%. More importantly, just about everything has gone right for Canada to start the year. Oil prices are up 40%, the huge Canadian-oil discount is gone and economic data in Canada has been one of the very few bright spots globally. The jobs numbers, retail sales numbers and growth numbers have all been upside surprises.

Yet the market has given the loonie little credit. Monday's survey showed why. The measure of sales has traded between +12% and +29% for the past seven quarters. It sank to -6%. Optimism about future sales fell to the lowest in three years. Capacity pressures had been at 10-year highs at 56%. They sank to 31%, which is the lowest since 2015. The measure of labour shortages had a similar plunge.

Despite the 70-pip fall in loonie Monday, the market is still tepid on the BOC's business outlook survey but the central bank itself embraces it. Expect it to be followed by more downcast comments from Poloz and his deputies.

Rest of the week

The rest of the week turns to China GDP tonight, UK, Eurozone and Canada and CPIs tomorrow, Eurozone PMIs after tomorrow and US retail sales on Friday, while most European markets will be shut for Good Friday.

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