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Modestly Dovish Reaction To Retail Sales

CANADA DATA
  • A weak advance for August and small miss for July offset any upside from stronger (nominal) details for July retail sales.
  • GoCs have rallied 0.5-1.5bp, led by the 2Y, to leave yields 0-1bp lower on the day.
  • They continue to underperform Treasuries with yields 1.5-3.5bps lower, whilst the 2Y Can-US yield differential remains on the high side at -17bps (recent highs of -15bps post-CPI).
  • USDCAD was initially slow to lift but has now ticked up ~20 pips off session lows of 1.3424.

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