• Canada CPI Y/Y: 2.2% vs 2.6% exp
  • Retail sales also come in well below forecasts
  • CAD drops sharply after the release

The latest data from Canada has come in on the soft side with both inflation and consumer spending figures missing targets. The CPI Y/Y came in at 2.2%, marking a pretty large miss on the 2.6% expected. The core reading was broadly inline with expectations but this remains well below the headline and overall this is a poor data point for the Loonie. 

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 The latest CPI figures missed forecasts by a wide margin while the core reading remains notably lower. Source: XTB Macrobond

At the same time as the inflation readings, there was also the retail sales figures for April. In M/M terms the metric cratered, coming in at -1.2% compared to an expected 0.0% and even though the prior was revised higher by 0.2% to 0.8%, it is clearly a disappointment. The core reading was worse than forecast with a print of -0.1% vs an expected 0.5%.  

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 The retail sales figures were also on the soft side, with both the headline and core prints below forecast. Source: XTB Macrobond

It is of little surprise that the market has taken a dim view of these data points with the Canadian dollar being hit with some strong selling almost immediately. The currency was trading higher earlier on, but since the release it has slid into the red against all of its major peers barring the JPY. The AUD is the biggest gainer with AUDCAD higher by 0.8%.

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 The Canadian dollar is falling lower since the data, and is now in the red against all of its peers barring the JPY. Source: xStation

The USDCAD is the most popular cross involving the Canadian dollar and this pair has hit its highest level in over a year in the minutes since the release. Price has been making a strong move higher in the last couple of weeks and has posted a new high this afternoon at 1.3380. CAD traders will also likely have one eye on today’s OPEC meeting with Oil making a fairly strong move higher in the past couple of hours and this could have an impact on this pair. 

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 USDCAD has hit a 12-month high since the data with the market moving up near the 1.34 handle. Source: xStation