#USDCAD @ 1.33358 : Cooling Canadian CPI is marginally negative for the loonie – TDS
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In Canada, Headline CPI surprised to the downside at 7.0% YoY in August as prices fell by 0.3% MoM (market: 7.3%, -0.1%). Core inflation measures also edged lower to 5.2%. These figures are marginally negative for the loonie as it helps alleviate the debate over terminal in Canada, economists at TD Securities report.
“CPI continued to cool through August with inflation falling from 7.6% to 7.0% YoY as prices fell by 0.3% MoM. Core inflation measures also edged lower to 5.2% on average to add to the upbeat tone, although this followed another upward revision to July (5.30% to 5.43%).”
“CPI data is marginally negative for CAD since the implication here is that the BoC may not need to keep racing alongside the Fed to jack rates up. In any event, this report does not warrant a huge reaction here; our bias remains for CAD underperformance, though it is noteworthy that price action in USD/CAD has respected the 50% retrace from the 2020-current cycle (around 1.3340/50).”
“Until the Fed, we should see the pair reflect risk sentiment but ultimately should be contained to key levels (1.3230/1.3350) until tomorrow’s meeting.”
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