CAD outperforms relative to NOK, AUD, NZD

Stronger than forecast retail sales and CPI inflation last month cushioned the fall of the CAD relative to other commodity currencies like the NOK, AUD and NZD. USD/CAD traded a high of 1.3354 and EUR/CAD vaulted 1.55. 

"By end 2015, forecast for USD/CAD is 1.30", says Societe Generale.

CPI inflation accelerated from 1.0% yoy to 1.3% (core rose from 2.3% yoy to 2.4%). On a more sobering note, Q2 GDP contracted by 0.5% qoq annualised, marking a second quarterly contraction and a return to recession for the first time since Q1 09.

The Bank of Canada last cut interest rates by 25bp in July and may be inclined to pause this month. Further easing is not ruled out if oil prices keep falling and capex is scaled back.