• Canadian headline inflation remains unchanged year-on-year in may, Bank of Canada to hike rate just once more in 2018

    Source: FxWire Pro - Commentary / 22 Jun 2018 10:37:15   America/New_York

    Canadian consumer prices remained unchanged in May, coming below market expectations. CPI rose 2.2 percent year-on-year, same as April’s, as compared with market’s expectations of 2.6 percent. On a sequential basis, prices rose 0.1 percent. Steadying the headline rate, energy prices rose 11.6 percent year-on-year, led by gasoline, but countered by falling electricity prices. Stripping energy, inflation softened to 1.6 percent. Statistics Canada showed falls in telephone service index as weighing on inflation in the month.

    Indeed, outside of energy, price growth was fairly weak throughout the board. Price growth slowed for five of eight major categories. Leading falls on a sequential basis were household operations, and clothing and footwear. The only category to see a significant rise was recreation, education and reading, after a decline of 1.5 percent in April. The Bank of Canada’s core measures were similarly unexciting. CPI-trim dropped to 1.9 percent, while CPI-median and CPI-common stayed the same at 1.9 percent.

    Today’s was a weak report. Coming along with a disappointing retail sales report, the data flow this week implies little need for urgency from the central bank to hike interest rates.

    “We expect just one more hike from the Bank of Canada this year, before it pauses to assess the state of a Canadian economy in the midst of a slowing housing market and ongoing trade uncertainty”, stated TD Economics in a research report.

    At 14:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bearish at -78.3932, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -70.4848. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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