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“CPI inflation slipped to 1.4% y/y in January on a significant correction in airfares which held the index to a 0.1% m/m increase, in line with market expectations,” TD Securities analysts noted. “Core inflation measures averaged 1.9% y/y, unchanged from December.”

Key quotes

“Overall the January print and subcomponents were largely in line with our expectations, and we continue to expect headline CPI to remain below 2% until November 2019. The report will also do little to change the patient narrative for the Bank of Canada. The Bank is already quite comfortable on the sidelines, though we note that Q1 CPI is tracking below their expectations (1.4% vs BoC’s projection of 1.7%).”

“FX: USDCAD continues to flirt with daily uptrend support. While this may bend, we do not think it will break and we look for dips below 1.31 to be met with buying interest as the CAD lacks merit. Instead, we prefer to tread cautiously from here and look for selective bearish expressions on crosses; most notably against SEK and JPY.”