Canada: Upside surprise in retail sales and CPI - TDS

Sandeep Kanihama FXStreet Contributor

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.”

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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