Research Team at RBS, suggests that on the data calendar, inflation is released in Canada.
“While the Bank of Canada started to sound a bit more concerned about the topside risks to inflation in their January statement, those concerns are likely alleviated by the very sharp reversal in the FX rate. With the CAD over 11% stronger vs. the USD since the January decision, we think the Bank’s primary policy focus will remain on growth, as the currency pass-through to inflation may prove less than feared.
In that light, February CPI inflation is released tomorrow and core inflation is expected to remain at the center of the Bank’s 1-3% target range for inflation. A significantly more dovish FOMC supportive of risk assets generally, including oil prices, likely leaves USD/CAD subject to further downside. But the strengthening in the currency, if sustained, could have a notable dovish influence on the Bank of Canada’s next forecast round in April.”
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