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CANADA: 50bp Cut Expectations Trimmed on CPI Beat But Not Ruled Out

CANADA
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  • BoC-dated OIS shows ~33bp of cuts for the Dec 11 meeting vs ~36bp pre-CPI. The Nov jobs report on Dec 6 is still to come before then.
  • USDCAD is holding a 40 pip decline on the release but a low of 1.3976 didn’t trouble support at 1.3959 (Nov 1 & 6 highs).
  • Headline CPI surprised a tenth higher than expected 2.0% Y/Y vs consensus 1.9%.
  • Importantly, the average of the BoC’s preferred core measures were also stronger than expected, at 2.55% Y/Y (cons 2.4) in October after an unrevised 2.35% Y/Y. It’s the highest since July.
  • CPI-trim 2.6% Y/Y (cons 2.4) after 2.4%, CPI-median 2.5% Y/Y (cons 2.5) after 2.3%
  • This beat for core inflation was further supported by CPIxFE slowing by a little less than expected, to 2.28% Y/Y after two months at 2.36% Y/Y vs some limited analyst expectations for ~2.2% Y/Y.
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  • BoC-dated OIS shows ~33bp of cuts for the Dec 11 meeting vs ~36bp pre-CPI. The Nov jobs report on Dec 6 is still to come before then.
  • USDCAD is holding a 40 pip decline on the release but a low of 1.3976 didn’t trouble support at 1.3959 (Nov 1 & 6 highs).
  • Headline CPI surprised a tenth higher than expected 2.0% Y/Y vs consensus 1.9%.
  • Importantly, the average of the BoC’s preferred core measures were also stronger than expected, at 2.55% Y/Y (cons 2.4) in October after an unrevised 2.35% Y/Y. It’s the highest since July.
  • CPI-trim 2.6% Y/Y (cons 2.4) after 2.4%, CPI-median 2.5% Y/Y (cons 2.5) after 2.3%
  • This beat for core inflation was further supported by CPIxFE slowing by a little less than expected, to 2.28% Y/Y after two months at 2.36% Y/Y vs some limited analyst expectations for ~2.2% Y/Y.