Prior month 2.5%(it came in as expected)CPI MoM -0.2% vs 0.0% expected.Prior MoM +0.4%
Core measures:
CPI Bank of Canada core YoY 1.5% vs 1.7% last monthCPI Bank of Canada core MoM -0.1% versus +0.3% last monthCore CPI MoM SA 0.1% versus 0.1% last monthMedian 2.3% versus 2.2% estimate. Last month 2.4%Trim 2.4% versus 2.5% estimate. Last month .7%Common 2.0% versus 2.2% last month
The initial reaction is a run to the upside for the USDCAD. The USDCAD went from 1.3590 to the current rate of 1.3610. There is resistance near a swing area between 1.3615 1.3622. The 200 bar moving average on a four hour chart is just above that at 1.3624 in the 38.2% retracement of the move down from the August high is at 1.3633. The price needs to get above all those measures to increase the bullish bias from a technical perspective.
With retail sales in the US at least with the headline moving higher than expected, it puts into question the basis points or 25 basis points at the Fed meeting tomorrow (should be positive for the USD). For the Bank of Canada, inflation is coming down while unemployment is going higher (6.6% unemployment rate was the highest ex the Covid period, since 2017).
There is a 48% of 50 bps cut at the October meeting now.
Other details from the report:
The deceleration in headline inflation in August was due, in part, to lower prices for gasoline, due to a combination of lower prices and a base-year effect. Excluding gasoline, the CPI rose 2.2% in August, down from 2.5% in July.Mortgage interest cost and rent remained the largest contributors to the increase in the CPI in August.The monthly decline was led by lower prices for air transportation, gasoline, clothing and footwear and travel tours.
This article was written by Greg Michalowski at www.forexlive.com.
