• Annual CPI was a little hotter than expected in Canada in April. 
• The loonie saw some kneejerk strength but has since pulled back. 

The pace of annual inflation in Canada according to the Consumer Price Index (CPI) rose to 6.8% in April, data released by Statistics Canada on Wednesday showed. That was slightly above expectations for a YoY rate of CPI to come in unchanged from March at 6.7% in April. MoM, prices rose at a pace of 0.6% according to the CPI, above the expected rise of 0.5% and down from last month's 1.4% gain.

In terms of the Core CPI, the YoY rate was hotter than the expected 5.4% at 5.7%, a surprise rise from March's 5.5% annual rate. Prices were up 0.7% MoM, above the expected rise of 0.4% but down from March's 1.0% gain. 

Market Reaction

The loonie saw some kneejerk strength as a result of the hotter than forecast inflation numbers, but USD/CAD has since pulled higher to its pre-data levels in the 1.2815 area.