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USDCAD Unwinds Canada CPI Decline

CANADA
  • USDCAD has moved higher with USD strength, currently +0.5% at 1.2910. It’s back close to recent levels established after sub $90/bbl WTI but before strong Canadian core CPI helped pivot market pricing closer to a 75bp BoC hike next month (OIS 70bps).
  • Resistance is seen at 1.2934 (Aug 15 high) with a key short-term resistance above that at 1.2985 (Aug 5 high), whilst Monday's low of 1.2770 provides initial support. Retail sales a next potential trigger for risk.
  • Can-US yield differentials hold or exceed yesterday’s gains when both the 2Y and 10Y increased to levels last seen prior to the stellar US payrolls report (2Y +7bps, 10Y -4bps).

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