Commerzbank: CPI report won’t have big impact on Canadian dollar

Canadian inflation picked up in April, benefiting the loonie temporarily. However, economists at Commerzbank do not expect the CPI report to have a significant impact on the Canadian dollar. “Yesterday’s inflation data provided significant impetus to rate hike expectations in the market, which also benefited the CAD, at least temporarily. However, OIS rate forecasts suggest that the market sees only a 50% chance of a further 25 basis point hike in the summer (before July). The Bank of Canada will release a financial system review tomorrow, in which it will look at risks to financial stability, and the Bank of Canada will hold a press conference on the report on the same day, which may be of interest to the market, but we don’t expect any surprises to impact the market. “