Quotes from Barclays Capital:
-January CPI (Friday) will be next key risk event from Canada. Headline CPI is expected to decline sharply in coming months because of lower oil prices (ie, the BoC is looking for 0.5% y/y for Q1, from 2.0% y/y in Q4 2014). But core prices and other components sensitive to domestic factors, such as services and non-durables excluding food and energy, will also be important.
-So far, these prices remain stable, and the BoC expects core CPI to stay broadly unchanged around 2% for 2015 and 2016. The OIS is already pricing in another 25bp cut at next meeting on 4 March, but negative surprises in measures of core price, if any, will add pressure for the BoC to ease further. The market is looking for headline CPI of 0.8% y/y and core of 2.1% y/y for this month, from 1.5% and 2.2%, respectively, in December.
