Canadian headline inflation likely to have reached 2 pct in February

Canadian headline inflation is likely to have reached the target rate in February. According to a TD Economics research report, the consumer price inflation is likely to have reached 2 percent year-on-year, reflecting a 0.4 percent sequential rise on the month. Energy prices were flat on balance, with lower gasoline prices countered by a possibly sharp rise in natural gas.

Food price growth is likely to have moderated, led by the food-away-from-home category that rose sharply in January on the Ontario wage hike. Meanwhile, the story is the same, with shelter prices reflecting more modest new home price pressures countered by increasing mortgage interest costs, noted TD Economics.

CAD exchange rate movements are comparatively benign with USD/CAD little changed in February after reversing much of its weakness in January. Excluding food and energy, core measures are expected to move marginally higher. Meanwhile, core inflation might continue to respond to the past absorption in labor market slack and move higher.

“Looking ahead, we expect headline inflation to hover just above 2 percent”, added TD Economics.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bullish at 109.737, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 34.7761. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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