Canada: Growth pulse has firmed notably in recent weeks - Westpac

Richard Franulovich, Research Analyst at Westpac, points out that Canada’s growth pulse has firmed notably in recent weeks, key data points such as retail sales and jobs comfortably beating expectations.

Key Quotes

“Reflecting that, our surprise index for Canada has surged in recent weeks, but at 5yr+ highs it is at unsustainable levels.”

“In the wake of the recent run of stronger data yield spreads have pushed back in CAD’s favour but the risk is that Governor Poloz continues to lean dovish when hew speaks next week, emphasizing “material excess capacity”. Deputy Governor Schembri’s recent comments stressing caution and persistent slack are likely a strong pointer to Poloz next week.”

“USD/CAD has been land-locked in a 1.30-1.36 range for five months. A persistently dovish leaning BoC is likely to leave CAD an underperformer.”