Contrary to many other developed nations, inflation in Canada is quite solid. CPI is up 0.6% m/m, more than 0.4% expected. Core CPI is up 0.4%, more than 0.3% expected. While y/y inflation is weak due to oil prices, core inflation is steady above 2%.
On the other hand, retail sales fell short of predictions and fell in general: -0.1% in the headline number, much lower than +0.7% predicted. There was a sweetener: an upwards revision from +0.7% to +0.9%, but the disappointment is still significant. Also core sales fell by 0.3% instead of rising by 0.6%. Also here, the upwards revision was not sufficient.
USD/CAD eventually rose, showing that the big disappointment in retail sales beat the small beat in inflation. The pair is heading towards 1.23.
Canada releases important economic data for the month of May: headline inflation, as reflected in the CPI, was expected to rise 0.4% m/m, bouncing after a fall of 0.1% last month. Core inflation was predicted to advance 0.3% after 0.1% previously. Retail sales were predicted to advance 0.7%, just as the previous month. Core sales carried expectations for +0.3% after 0.5% beforehand.
USD/CAD traded around 1.2250.
In general, the loonie gained from the decline of the greenback following the dovish message from the Fed earlier this week.
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