Canada: CPI back to target - TDS

Analysts at TD Securities note that the Canada’s headline inflation firmed to 2.0% in April as expected, with the headline index rising by 0.4% on a surge in gasoline prices which was only partly attributable to seasonal factors.

Key Quotes

“Measures of core inflation softened to 1.9% y/y on average, down from 2.0% in March, which is consistent with an economy running with excess capacity. This release will do little to sway convictions at the Bank of Canada where the primary focus is the near-term growth outlook.”

“FX: For USDCAD, we suspect the balance of internal and external drivers underscores that technicals will offer a guide to the short-term price action. The 1.3520 levels offer a key pivot in the very short-run.”