Summary:

• Canadian CPI M/M +0.1% vs +0.1% exp
• Core readings also little changed
• CAD remains lower on the day with USDCAD near weekly highs

The final major economic data release of the week has seen Canadian inflation figures come in inline with forecasts with a M/M CPI reading of +0.1% vs +0.1% expected and +0.2% previously. The Y/Y figures were also inline with a print of 1.4% matching expectations. 

As well as the headline reading there are 3 core CPI measures also released. The common CPI Y/Y rose to 1.6% from 1.5% prior but the median CPI Y/Y fell to 1.7% from 1.8% previously. The trimmed CPI Y/Y was flat at 1.5%. Overall this leaves a fairly balanced picture of inflation from Canada and this is in keeping with what has been seen now for the past couple of years. An average of the 3 core readings remains around the middle of the 1-2% band and indicates a slow and steady increase.

 The CPI Y/Y and an average of the 3 core readings remain around the middle of the 1-2% band. Source: XTB Macrobond

The market has seen a little weakness in the Canadian dollar post-release with USDCAD rising above the 1.28 handle to its highest level of the weak. This level may now be seen as a possible support to keep an eye on whilst the October highs seen after the BOC meeting around 1.2910 could be a potential resistance.

 The USDCAD has popped above 1.28 to trade at its weekly highs following the release. Source: xStation

Another CAD pair that has seen a notable reaction to the data is CADJPY. This pair has dropped below the 88 handle in the last hour and is now close to the lows seen last month at 87.78. A break below there and you would have to go back to early September to find a lower price. In addition, the market has dropped back below the Ichimoku cloud on D1 and this could be seen as a sign of a long term trend change.  

 CADJPY is approaching last month’s low and in dropping below the cloud the market may be seen to be in a longer term downtrend. Source: xStation