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Breakevens Slide After 10Y TIPS Auction Tails

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  • USDCAD has drifted higher now that we are beyond the cutoff for a congested option expiry pipeline layered between 1.2485 - 1.2525.
  • It reached a session high of 1.2551 (currently 1.2547 as the Fed’s Williams speaks) for a 0.6% intraday swing but still down -0.8% on the week after large declines.
  • A large part of the rise came prior to US data, but continued with the increase in US consumer long-term inflation expectations seeing larger Fed hikes priced in.
  • Above yesterday’s range, it sits comfortably between resistance at 1.2621 (Dec 31 low) and support at 1.2454 (Dec 13 low).
  • Ahead: various data on Mon including the BoC Business Outlook Survey with MLK Jr Day in the US. The main release is Canadian CPI on Wed (BoC & Fed decisions Jan 26).