Canada: Data pulse is cooling - Westpac

Richard Franulovich, Research Analyst at Westpac points out that with the exception of jobs, the complexion of the Canada’s data has eased off materially lately and their base case is that the weak data run is mostly just payback for exceptionally strong data in Q2 and into Q3.

Key Quotes

“After a solid 3% growth rate in 2017 the BoC (and consensus) forecast a more moderate 2.1% in 2018. Our base case is that the BoC and consensus are too cautious. PM Trudeau’s 2016 fiscal stimulus is still washing through the economy, US growth prospects are firm, oil prices are at 2 ½ year highs and local financial conditions remain broadly supportive for continued decent growth.”

“USD/CAD should trend to the low 1.20s in H1 2018. BoC rate expectations have been trimmed to +35bp by July 2018 but if the above growth scenario pans out the BoC could easily match that.”