Canada CPI grew 0.3 in March after the 0.6% surge in February. CPI accelerated to a 2.3% y/y clip in March from 2.2% in February, the fastest rate since the 2.4% pace in October of 2014. The CPI-trim slowed to a 2.0% rate of y/y growth from 2.1%, the CPI-median expanded 2.1% versus an identical 2.1% and the CPI-common held at 1.9% from 1.9%. While total CPI growth is elevated and the core measures remain close to 2%, this report is a bit softer than anticipated, which may temper elevated expectations for a BoC rate hike in May. Indeed, in view it is supportive of steady policy in May, with the odds still tilted towards a 25 bps rate hike in July. Notably, the BoC expects a 2.3% Q2 growth pace for CPI, with March’s growth rate matching that pace (expectations were for March to overshoot 2.3%). Additionally Canadian Retail Sales rose 0.4% in February after a revised 0.1% gain in January (was +0.3%). A 1.4% rebound in motor vehicle sales and parts dealers drove the increase in total sales during February, as expected. The ex-autos sales aggregate was flat (0.0%) following a revised 1.0% gain in January (was +0.9%). Total sales volumes rose 0.3% in February.
All in all, the data was a touch on the weak side, USDCAD continued its recovery and spiked north of 1.2700 and to our T1 at 1.2708 for a net gain of +83 pips.
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