- Loonie Bears dominate intraday trading
- Bulls squandered yesterday’s weak retail sales
As expected, Canadian inflation in April rose +2.0% (highest level in two-years) on Friday, or the level that Governor Poloz at the BoC aims for when establishing rate policy.
On a month-over-month basis, both headline and core prices rose +0.3% and +0.2%, respectively.
Digging deeper, the gain was driven mostly by the volatile component, energy. Pump prices climbed +6.6%; natural gas costs rallied a whopping +26% and electricity +4.6%. Stripping out the energy effect, the core-CPI also happened to rise +1.4%.
Just like other Central Bank policy makers, the BoC will focus on the core print and explain away the year-over-year +2% headline as being temporary. Expect them to remain cautions about downside risks to inflation given tepid wage gains and signs of a weaker job market. Last months disappointing employment report lost -28.9k jobs, but kept the unemployment rate steady at +6.9%.
Inflation, or lack of it, remains a concern for G10 central bankers. Draghi and company at the ECB are currently eyeing unconventional measures to drive growth and spending in order to spark price increases and ward off deflation. On June 5th capital markets will get to see if the ECB will have the gumption to put into practice what they have been loudly preaching.
The USD/CAD bears now get their chance especially after the bulls squandered their opportunity after Thursday’s weaker Canadian retail sales print (-0.1% vs. +0.2%). The loonies steady posture after the CPI print remains consistent with the tight trading range as both the US and Europe head into a long weekend.
On tap for next week:
With the holiday shortened trading week the potential of weekend event risk (Ukraine, EU elections) seems to bolstering some bond buying and keeping currencies in their familiar tight trading ranges.
With respect to the US and Canada, next week is light on the data front. Consumer confidence and durable goods orders will start the US’s week on Tuesday followed by preliminary GDP, unemployment claims and pending home sales on Thursday. Canada is very light and has to wait a week until next Friday’s GDP release.
- U.S. Treasuries Headed for Steep Weekly Loss – MarketPulse 
- Fed’s Williams: U.S. Bond Market ‘More Puzzling’ – MarketPulse 
- More U.S. Cities Likely to be in Financial Trouble – MarketPulse 
- US Jobless Claims Rise But Still Close to 7 Year Low – MarketPulse 
- Canada Retail Sales Drop Slightly In March – MarketPulse 
- Mexican Inflation Drops on Energy and Food Prices – MarketPulse 
- US Stocks Higher Ahead Of Fed – MarketPulse 
- US Tsy’s Over Yellen’s 6-Month Comment – MarketPulse 
- Fed Officials: Rate-Hike Tack Will Be Flexible – MarketPulse 
- Fed’s Dudley: Interest Rates will remain Historically Low – MarketPulse 
- Fed’s Dudley: Rate Increases will be ‘Relatively Slow’ – MarketPulse 
- Fed Minutes May Spark Some Volatility – MarketPulse 
- Fed’s Plosser: Current Taper Pace may be Too Slow – MarketPulse 
- Canada Wholesale Posts Surprise Drop On Autos – MarketPulse 
- Fed and BOE Minutes in the Week Ahead – MarketPulse 
- Gold Falls Before Ukraine and EU Elections – MarketPulse 
- Low Supply Boosts Oil To Four Month High – MarketPulse 
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