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Slight miss in CPI, retail sales strengthen from vehicle purchases

Posted on: July 21, 2017

Slight miss in Canadian CPI this morning but a Retail Sales beat has the market selling USDCAD to start the session. CPI slowed to 1% YoY from expectations of 1.1%, while Retail Sales came in at 0.6% compared to expectations of 0.3%. Strength in Retail Sales was attributed to demand for new and used vehicles.

The core measures of inflation saw some growth but the headline number was still weaker, suggesting that Poloz might not be far off when he says inflation is in the horizon. It seems like the market is comfortable with the fact that it’s the idea of inflation that matters, not seeing inflation in the data prints. There is now a 70% chance of a hike in October and 72% chance before the end of the year. Technically speaking, for USDCAD support around 1.2540 is key, not much below that until 1.2460. On the topside 1.2630/40 is the first level of resistance to look for.

AUD saw some weakness overnight as RBA Assistant Governor Debelle talked down the currency, suggesting that Australia was under no obligation to raise along side its peers and that a higher AUD works against faster global growth.

In other news, Trump continues to dominate the news cycle for the wrong reasons, as rumors that the FBI probe will extend into his business dealings saw USDJPY selling. Yesterday, the ECB did not make any moves at its policy meeting, but that did not stop the EUR from catching a bid against the greenback. For future market color, participants will look to Draghi’s attendance and speech at the Jackson Hole conference. The speech is expected to highlight reflationary forces within the euro area, and its reduced dependence on its current $68.5 billion monthly monetary stimulus.

  • Yesterday's NA 1.2541 - 1.2625
  • Asia 1.2572 - 1.2605
  • London 1.2546 - 1.2609


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