20 Jun 2014
Preview: Canada's CPI, retail sales - RBS
FXStreet (Bali) - FX Strategists at RBS shared their views on this Friday's Canada's CPI and April retail sales figures, and how it may affect CAD price action.
Key Quotes
"Canada's CPI for May is released along with April retail sales. After base effects helped boost headline inflation in April, we see the risks favouring a slightly weaker than consensus result in May. Either way, the June statement indicated the Bank of Canada appears fully committed to looking through near-term inflation pressure amid a still tepid growth outlook. The sales impact of the late Easter may lead to a boost in April Canadian retail sales."
"While USD/CAD has tested the 2014 lows, short term interest rate support has moved in favour of the USD over the past few weeks. The positive carry environment, and still negative CAD positioning, may keep the CAD supported but we are cautious on chasing CAD gains further from current levels, particularly as rate differentials have moved against it. We are neutral on at current levels, with a medium-term bias to sell CAD."
Key Quotes
"Canada's CPI for May is released along with April retail sales. After base effects helped boost headline inflation in April, we see the risks favouring a slightly weaker than consensus result in May. Either way, the June statement indicated the Bank of Canada appears fully committed to looking through near-term inflation pressure amid a still tepid growth outlook. The sales impact of the late Easter may lead to a boost in April Canadian retail sales."
"While USD/CAD has tested the 2014 lows, short term interest rate support has moved in favour of the USD over the past few weeks. The positive carry environment, and still negative CAD positioning, may keep the CAD supported but we are cautious on chasing CAD gains further from current levels, particularly as rate differentials have moved against it. We are neutral on at current levels, with a medium-term bias to sell CAD."