MNI China Daily Summary: Thursday, November 21

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CANADA: CAD Rates Holding Onto Post-CPI Adjustment

CANADA
Bank of CanadaCentral Bank NewsCanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • BoC-dated OIS has held onto its initial reaction to stronger-than-expected core CPI inflation in October, tracking 33-34bp of cuts priced for Dec 11 since the release vs ~36bp prior.
  • Analysts previously calling for a second 50bp cut next month haven’t been swayed (CIBC, RBC and TDS all sticking with a 50bp cut), with GDP for Q3 (Nov 29) and the jobs report for Nov (Dec 6) still to come.
  • The CPI surprise has helped Can-US 2Y yield differentials lift a touch further, currently at -108bps vs -110bp prior, -111.5bp at yesterday’s close and -115bp from Friday. However, barring the past few weeks, these are still levels that were last seen in the 1990s.
  • USDCAD is currently back close to its initial shift lower. At 1.3981 vs an earlier low of 1.3968 that didn’t trouble support at 1.3959 (Nov 1 & 6 highs).
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  • BoC-dated OIS has held onto its initial reaction to stronger-than-expected core CPI inflation in October, tracking 33-34bp of cuts priced for Dec 11 since the release vs ~36bp prior.
  • Analysts previously calling for a second 50bp cut next month haven’t been swayed (CIBC, RBC and TDS all sticking with a 50bp cut), with GDP for Q3 (Nov 29) and the jobs report for Nov (Dec 6) still to come.
  • The CPI surprise has helped Can-US 2Y yield differentials lift a touch further, currently at -108bps vs -110bp prior, -111.5bp at yesterday’s close and -115bp from Friday. However, barring the past few weeks, these are still levels that were last seen in the 1990s.
  • USDCAD is currently back close to its initial shift lower. At 1.3981 vs an earlier low of 1.3968 that didn’t trouble support at 1.3959 (Nov 1 & 6 highs).