CAD - Inflation data in focus

Inflation data have been resilient in Canada, despite the massive deterioration in its terms of trade. Core CPI at 2.4% y/y continues to run above the BoC's 2% target, aided by strength in consumer spending. 

The market is expecting these pressures to decline in April to 2.3% y/y. A stronger decline than expected would raise expectations that the BoC's January insurance cut is not enough and push USDCAD higher. 

"We would expect a larger market move from such an outturn than a positive data surprise" said Barclays in a report on Monday.