Like in the US, inflation rebounded in Canada February. The Loonie rallied to 1.2385 on the news with some expecting the inflation bump to derail any move toward QE from the BOE. In our view, it will take much more than a one -month blip in CPI to dissuade central banks to embrace novel forms of monetary policy.

Headline inflation rose 0.7% in February while the core rose 0.5%. These are hot figures, to be sure, but one swallow does not a summer make.

1.2365 is important support on dips near-term with resistance in the 1.2450/80 area on rebounds.