Canada Macro Daily(Beta Mode)
CPI Hits 3% as Tariff Deadline Nears
Market Snapshot
| Asset | Level | Change |
|---|---|---|
| S&P/TSX | 36,367.90 | -0.82% |
| USD/CAD | 1.39 | +0.02% |
| EUR/CAD | 1.61 | +0.21% |
| WTI Crude | 84.70 | -0.28% |
| Natural Gas | 2.80 | +0.94% |
| Gold | 4,426.50 | +1.39% |
| Brent Crude | 91.61 | +0.65% |
| Bitcoin | 64,442.81 | -0.37% |
| Canada 2Y Govt Yield | 2.27% | +1.00% |
| Canada 10Y Govt Yield | 3.42% | -3.43% |
Prior Economic Events
| Data | Prior | Cons | Actual |
|---|---|---|---|
| Inflation Rate Year-over-Year | 2.80 | 2.90 | 3 |
| Core Inflation Rate Year-over-Year | 2.10 | - | 2.30 |
| Inflation Rate Month-over-Month | -0.40 | 0.40 | 0.50 |
| Housing Starts Level | 240,800 | 248,000 | 229,100 |
Canada Housing-Related: Unemployment Rate | Type: macro_line | Unemployment %: 6.4 (2026-07-01) | Range: 4.8–7.1 | Trend(6pt): 7,5,5.7,6.8,6.6,6.4
Today's Economic Events
| Data | Prior | Cons | Time |
|---|---|---|---|
| Thursday (2026-08-20) | |||
| New Housing Price Index Month-over-Month | -0.10 | - | 04:30 |
| Friday (2026-08-21) | |||
| Retail Sales Month-over-Month Final | 1 | 0.40 | 04:30 |
| Retail Sales Month-over-Month Preliminary | 1 | - | 04:30 |
| Retail Sales excluding Autos Month-over-Month | 1.20 | 0.40 | 04:30 |
| Senior Loan Officer Survey | - | - | 06:30 |
- Canada CPI YoY rose to 3.0% in July, exceeding the 2.9% consensus and lifting core to 2.3%.
- Housing starts dropped to 229,100, well below the 248,000 forecast, signaling construction weakness.
- TSX fell 0.82% to 36,367.90 while the 10-year yield slipped 3.43% to 3.42% on mixed inflation signals.
Yesterday's Recap
Statistics Canada reported July CPI at 3.0% year-over-year, up from 2.8% and above consensus, with the month-over-month print at 0.5%. Core inflation accelerated to 2.3%, adding pressure on the upper end of the Bank of Canada’s target range. Housing starts contracted sharply to 229,100 units, missing forecasts and highlighting softening residential investment.
The S&P/TSX closed 0.82% lower near a two-week low as investors weighed hotter inflation against looming U.S. tariffs. USD/CAD edged up 0.02% to 1.39 while WTI crude held near 84.70 amid global supply concerns.
The 2-year yield rose 1.00% to 2.27% as markets adjusted rate-cut odds. Energy and financials led the TSX decline while gold gained 1.39% to 4,426.50 on safe-haven flows. Brent crude advanced 0.65% to 91.61, providing some offset for Canadian energy producers even as broader risk aversion weighed on equities.
The Day Ahead
Attention turns to the New Housing Price Index on Thursday, expected to show continued softness after the prior -0.1% reading. Retail sales data on Friday will test whether consumer spending cooled following the July inflation print, with the ex-autos component forecast at 0.4%. The Senior Loan Officer Survey may reveal tighter credit conditions for households and businesses.
Markets will also monitor final U.S.-Canada trade talks ahead of the tariff deadline. Any escalation in auto-sector duties could further weigh on CAD and TSX sentiment. Energy prices remain a key variable given Brent’s recent advance above 91.
Other Economic Notes
Persistent inflation above 3% complicates the Bank of Canada’s path even as growth indicators soften. Trade tensions with the United States threaten to disrupt supply chains and raise costs for Canadian exporters, particularly in autos. The Canadian dollar has held near early-June highs as rising oil prices offset modest USD strength.
Domestic bond yields reflect divided views on the timing of further easing, with the curve flattening modestly. Economists note that last year’s tariff shock did not trigger recession, yet repeated external shocks risk eroding that resilience.
