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OUTLOOK: US CPI, CAGB 5Y Sale

CANADA
  • Short-dated government bonds have mirrored the partial retracement seen in USTs, opening higher with the 2Y up 1.3bps at 1.083%.
  • USDCAD has rallied in recent trade but is still -0.15% lower on the day at 1.2555, after trading sharply lower yesterday with a clear break of support at 1.2621 (Dec 31 low). This has strengthened the case for bears, next opening 1.2493 (Nov 16 low) whilst firm short-term resistance is 1.2726 (20-day EMA).
  • With no local data until Fri, including the BoC’s Business Outlook Survey for Q4, focus is from USD risk with US CPI today at 0830ET. Consensus is for core at another strong +0.5% M/M in Dec.
  • Issuance: CAGB C$4B 5Y at 1200ET.

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