Canada: CPI surprised sharply to the upside in May - TDS

Sandeep Kanihama FXStreet Contributor

Analysts at TD Securities note that the Canada’s May CPI surprised sharply to the upside, with headline inflation firming to 2.4% y/y as prices rose by 0.4% on the month (market: 2.1%, 0.1%).

Key Quotes

“Core CPI also improved from April, with the average of the Bank of Canada's preferred measures rising from 1.90% to 2.07% y/y.”

“This should provide the Bank some comfort with its current policy stance and allow them to push back against market pricing for cuts. However, any potential rate hikes are still a long ways off, with a number of obstacles to clear beforehand.”

“FX: CAD caught a bid and will fuel speculation that better days remain ahead. However, we require much improved activity data to confirm. In the short-term however, CAD may enjoy a better bid on the crosses (like EUR and AUD) than against the USD, where it trades a touch rich.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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