Inflation accelerated to a faster pace in May. A larger than expected 0.4 percent monthly gain in prices put the annual rate at 2.4 percent, 0.4 percentage points higher that its April rate as well as the BOC’s medium-term target. Excluding food and energy, prices rose 0.5 percent on the month and were up 2.4 percent year-on-year. Today’s update shows inflation somewhat hotter than the BOC’s latest Monetary Policy Report forecast, which called for the CPI and the three core rates to “move back up” to its 2 percent target by year end. As such, it may revive some hawkishness at the central bank not long ago claiming to be in “no rush to get back into the saddle on rate hikes”.
Oil prices failed to move higher on the lower inventory numbers, as has the Canadian dollar, markets are generally in a holding pattern until the U.S. Federal Reserve releases its comments at 11:00 am our time. Expectations are for rates to remain the same while providing a timeline as when to expect the next round of rate cuts. Expect the unexpected.
Currently Close Range
USDCAD 1.3345 1.3377 1.3337-1.3383
EURCAD 1.4973 1.4973 1.4943-1.4995
GBPCAD 1.6856 1.6799 1.6772-1.6881
CA: Consumer Price Index May M/M 0.4% 0.4%
Y/Y 2.0% 2.4%
US: Petroleum Status Report wk6/14
Crude oil Inventories 2.2M Brls -3.1M Brls
Gasoline 0.8M Brls -1.7M Brls