USD/CAD fell three quarters of a cent to as low as 1.1192 on the October CPI report but has rebounded to 1.1215 as economists rifle through the data to see if there were any special factors.
Canada CPI components
The shelter component was strong in the month, rising 0.2%. It takes up slightly more than 25% of the index. Within in that, the property taxes component rose 2.2% and rising natural gas prices were also costly.
The ‘clothing and footwear’ category’ was also a driver of the surprise as it rose 0.2% m/m. That line takes up about 6% of the index (do people really spend 6% of their income on clothing and footware?).
Transportation was also a surprise boost despite the fall in gasoline prices, rising 0.3% m/m.
Overall, some temporary factors appear to be at work here. The y/y numbers were also boosted by an exceptionally weak reading last October.
Still, there are some risks that the Bank of Canada shifts a tad more dovishly.
