PREVIOUS TRADING DAY EVENTS 27 June 2023

Yesterdays Canadian inflation data showed lower figures suggesting that it is slowing down significantly. Canadas annual inflation rate came in at 3.4 in May.

The BOC hiked its overnight rate to a 22year high of 4.75 earlier in June as a response to undesirable inflation data. After the last rate increase, the Bank said it would be assessing the upcoming data for deciding whether it would increase borrowing costs. This latest data suggests that a pause is on the table. 

The inflation reading might give the Bank of Canada some reason to skip July, said Derek Holt, vice president of capital markets at Scotiabank. While Holt sees another hike coming this year, he characterised it as finetuning and now more likely in September.

With the labour market also loosening in May, the case for another rate hike in July is not quite as strong as it seemed a few weeks ago, said Stephen Brown, deputy chief North America economist at Capital Economics. But Brown still says a hike in July is more likely than not.

Source httpswww.reuters.commarketscanadasinflationrateslows34maycheapergas20230627

According to the U.S. Consumer Confidence report yesterday,  consumers are more optimistic about the labour market and economic expansion. The CB index rose to 109.7 this month from 102.5 in May.

A measure of consumer expectations for a sixmonth outlook rose to 79.3. A measure of expected inflation dropped to the lowest level since 2020….