Morning Commentary & Currency Insights – October 19, 2018

All eyes are on Canadian CPI & retail sales data due out at 8:30 AM.  USD/CAD has followed general USD strength over the past few days and we open this morning half a cent lower from the highs seen yesterday.  In reality it will take a material data miss to make the data-dependent BoC change course vis a vis next week’s rate decision where we anticipate a 25bp hike.  Should we see signs of core retail sales appearing to stagnate, in part due the lagged effects of previous hikes, expect that to create increasing debate as to the scope of additional tightening beyond next week’s decision. Look for any retail or inflation disappointment to open up 1.3110/15 with a close above here opening up a visitation of early September highs at 1.3226.  Conversely a break below 1.2940 is required to target 1.2800.

UPDATE:

*USD/CAD RALLIES AS CANADA INFLATION SLOWS

*EX-AUTO CANADIAN RETAIL SALES FALL 0.4% VS. FORECAST 0.1% GAIN

*CANADA MONTHLY CONSUMER PRICES FALL 0.4% VS. 0.1% FORECAST GAIN