CAD flows: CAD gains marginally on stronger CPI

Canadian January CPI has come in on the strong side of consensus in both the headline and all the core measures, but there is a very muted reaction in USD/CAD, which has just dropped around 10 pips after starting the North American session firm, and hasn’t even tested the lows seen in the European morning. USD/CAD continues to trade some way below the level suggested by yield spreads, and given the event risk of the tariff decision on March 1, the risks look weighted to the CAD downside, despite this data suggesting less aggressive easing from the BoC.