CAD flows: CAD gains after stronger core CPI numbers

Canadian CPI comes in on the strong side of expectations, with all the BoC core measures (common, trimmed, and median) above consensus, even though the headline CPI was in line with consensus. Canadian yields are higher in response, catching up with the rise in US yields seen through the European morning. But USD/CAD still looks a little low relative to yield spreads, and the market is already pricing a less aggressive easing path for the BoC than for the Fed, so we don’t see a great deal of USD/CAD downside on the data, with 1.34 likely to hold. However, the data does reinforce 1.3480 as resistance, at least in the short run.