This morning we had some interesting economic data out of Canada. On the one hand inflation is surprisingly anemic (0.1% in July YoY, relative to an expected 0.5%). On the other hand, wholesale trade in June came in at much higher than expected (18.5% vs expected 11%). The low inflationary environment but robust initial recovery is consistent with the Bank of Canada’s prediction at its last Monetary Policy Report which forecasted a robust initial surge in economic activity followed by a slower “last mile”, all while experiencing a long term environment of low inflation. The selling of USD has subsided this morning and the USD CAD exchange rate is unchanged from last night. But the Canadian dollar is already trading comfortably at the highest level since late January. It gained during the day yesterday but is flat this morning. The overall story has been one of US dollar weakness against all major currencies.
