Something to cool off the red-hot Canadian dollar?
Canadian CPI and retail sales numbers are due at the bottom of the hour. They're the only notable releases on the economic calendar today.
USD/CAD is virtually flat on the day at 1.2595 ahead of the data as a dip in oil is balanced by a broadly weaker US dollar.
Both releases are noteworthy. CPI is forecast to fall 0.1% m/m after a 0.1% rise in May. I'm not an economist but oil and gasoline prices took a dive in June so I could see a much larger dip. Aside from the headline data, watch the BOC's three core measures for a signal on the trend. I see the risks as skewed toward CAD strength on that front. The BOC has already brushed aside weakness as temporary so if prices fall it could be shrugged off while inflation rises, there will be talk about a hike in September.
Retail sales is a different story. The data is for May and that was the first month when housing prices in Toronto began to roll over. The wealth effect generally doesn't kick in that quickly but it's possible that consumers started to tighten up. In April sales rose a hefty 0.8% with ex-autos up 1.5%. The consensus is for 0.3% and 0.0%, respectively. I see risks to the downside and I see the BOC fretting more about weak consumers than weak inflation.
On net, given the drop in USD/CAD in the past month, I see more of a risk of a rebound but anything close to 1.27-1.28 is going to be sold.
I spoke with Reuters yesterday about the Canadian dollar.
