Canadian Consumer Price Index (CPI) growth slowed further in December. Loonie rose after the data. A hawkish Bank of Canada next week could provide furthe support.
CAD stronger following publication of inflation data
“Even though the overall rate eased a little more than expected to 6.3% (Bloomberg 6.4%), and the core rates (median and trim) eased slightly to 5.0% and 5.3% respectively (Bloomberg: 4.9% and 5.2% respectively), the previous month’s result was corrected to the upside. That means the impression of an overall rate slowly easing is confirmed, as is the image of a core rate still stubbornly moving sideways above 5%.”
“Just like the (small) majority of analysts polled by Bloomberg we expect the BoC to take a further step of 25 bps to then 4.5% at its meeting next week. This seems to have been increasingly priced in by the market.”
“The Loonie was able to benefit from yesterday’s inflation data. A surprisingly hawkish BoC might provide further support, in particular if the other central banks surprise on the dovish side.”
