CANADA: GoCs Reverse Firmer Open With Strong Retail Sales Report

• The industrial product and raw materials price report didn’t have a discernible impact on Canadian asset prices although it nevertheless shows a further acceleration in cost pressures in Y/Y terms.
• BoC-dated OIS has ~21bp of cuts priced for next Wednesday’s BoC decision.
• Not linked to the data, USDCAD has since stepped higher to session highs of 1.4370 on the back of a leg higher in the BBDXY index. It remains within particularly wide recent ranges (key support at 1.4261 from Jan 20 low vs resistance at 1.4516 from Jan 21 high).
• Details: IPPI was admittedly softer than expected at 0.2% M/M (cons 0.6) after 0.6% M/M in Nov and 1.2% in Oct, although IPPI ex-petroleum has seen a more consistent recent trend with 0.4% M/M in Dec after 0.5% in Nov and 1.0% in Oct.
• That leaves IPPI ex-petroleum inflation at 5.1% Y/Y (fastest since Nov 2022) whilst raw materials inflation stands at 9.1% Y/Y or 12.1% Y/Y ex-petroleum (fastest since May 2022). 

RXH5 133.50/134.50cs, bought for 17.5 in 8.2k.

• MNI: CANADA DEC INDUSTRIAL PRICES +0.2% MOM; EX-ENERGY +0.4%
• CANADA DEC RAW MATERIALS PRICES +1.3% MOM; EX-ENERGY +1.6%