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Limited Impact On CAD Assets From Strong Input Cost Inflation

CANADA DATA
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  • There has been limited initial market reaction to stronger than expected industrial product and raw materials prices in April.
  • USDCAD dips ~10 pips to 1.3620 but only to reverse an uptick seen shortly ahead of the data and with earlier lows of 1.3615 intact (bear trigger at 1.3590).
  • Can-US 2Y yield differentials have increased just 0.5bp to -68bps to increase the move away from Friday’s close at -71.5bps.
  • BOC-dated OIS shows between 16-17bps of cuts for the Jun 5 decision.
  • Industrial prices increased 1.5% M/M (cons 0.9) in April after a marginally upward revised 0.9% (initial 0.8) in March, with the ex-energy component driving a large share of the April increase at +1.4%.
  • The StatsCan press release notes primary non-ferrous metal products rose 8.3% M/M (largest since Mar’22, owing to unwrought silver and gold price increases) on geopolitical tensions, along with strong increases for industrial metals (unwrought copper and unwrought aluminium) following China manufacturing strength.
  • The separate raw materials index also increased 5.5% M/M (cons 3.0) after a downward revised 4.3% (initial 4.7), again with large gains for the ex-energy component at 5.3%.
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  • There has been limited initial market reaction to stronger than expected industrial product and raw materials prices in April.
  • USDCAD dips ~10 pips to 1.3620 but only to reverse an uptick seen shortly ahead of the data and with earlier lows of 1.3615 intact (bear trigger at 1.3590).
  • Can-US 2Y yield differentials have increased just 0.5bp to -68bps to increase the move away from Friday’s close at -71.5bps.
  • BOC-dated OIS shows between 16-17bps of cuts for the Jun 5 decision.
  • Industrial prices increased 1.5% M/M (cons 0.9) in April after a marginally upward revised 0.9% (initial 0.8) in March, with the ex-energy component driving a large share of the April increase at +1.4%.
  • The StatsCan press release notes primary non-ferrous metal products rose 8.3% M/M (largest since Mar’22, owing to unwrought silver and gold price increases) on geopolitical tensions, along with strong increases for industrial metals (unwrought copper and unwrought aluminium) following China manufacturing strength.
  • The separate raw materials index also increased 5.5% M/M (cons 3.0) after a downward revised 4.3% (initial 4.7), again with large gains for the ex-energy component at 5.3%.