EUROZONE ISSUANCE: EGB Supply: W/C 7 July (2/2)

Asked at the post-meeting press conference if inflation would need to slow in both May and June for BOC to consider a July cut, BOC Gov Macklem responds:

• "Yes, we will be looking at those carefully... CPI ex-tax moved up in April. And more significantly, if you look at our our preferred measures of core, and in fact, if you look at a range of alternative measures of core if you look at the distribution of price changes, the percentage above 3%, what you can see is they all moved up in April. That has got our attention."
• "Some of the components, particularly travel, for example, have been very volatile... but the fact that quite a number of measures of core or alternative measures of core all moved up does make you think that underlying inflation could be a little bit firmer than we thought, so, you know that is something we will be watching and what we've indicated is that look we're looking at both those downward pressures on inflation coming from the weaker economy and the upward pressure on inflation, coming from costs, and, yeah, we'll have to factor all that in in July."
• Macklem adds: "We did talk about the future path [of rates], and the Governing Council thought that there could be a need for a further reduction in the interest rate - if the tariffs continue, if that creates more weakness in the Canadian economy, and if the cost pressures coming through inflation are contained, I wouldn't interpret that as forward guidance. That was part of our deliberations, nothing more, nothing less. The only forward guidance we can give you, really is, as I've already indicated, given the unusual level of uncertainty we are proceeding carefully. And what that means is that we're being less forward looking than usual."

• BOC: ECONOMY STILL SOMEWHERE BETWEEN ITS TWO TARIFF SCENARIOS
• BOC'S MACKLEM SAYS HIGHER CORE PRICES `HAS GOT OUR ATTENTION'

• Weakness for the greenback following weaker-than-expected US ADP and ISM services prints continues to dictate general sentiment across the G10 FX space on Wednesday, although a moderately hawkish lean to the BOC decision is providing an additional tailwind for the Canadian dollar.
• As noted, the communications kept the door open to a cut but not emphatically (Gov Macklem's opening statement: "We also discussed the path ahead for the policy interest rate. Here, there was more diversity of views.”
• As such, USDCAD reaches fresh cycle lows below 1.3675 in recent trade, keeping bearish technical conditions firmly intact for the pair.
• Sights are on 1.3643 next, the Oct 9 low/Sep high. Below here, attention will be on 1.3579, the 1.5 Fibonacci projection of the Feb 3 - 14 - Mar 4 price swing, before the September lows at 1.3420 will garner attention.