CANADA DATA: Expected Retail Sales Recovery Adds To BOC Hold Case

• "In terms of how the labor market has has dealt with the shocks, how the second round effects have passed through over the last year, it turned out that the inflation process wasn't as self correcting as I thought it a year ago. It might be so policy has had to stay more restrictive than probably I imagined it would be a year ago. That has helped get us to the point where I think, and I think that, you know, the majority on the committee think that the the domestic disinflation process is continuing, but there are those two sided risks around that."
• "I do feel, I still feel comfortable saying that I think the policy is clearly restrictive. Using Philips framing... with interest rates at four and a quarter or 4% still above any sense of what the neutral or terminal rate would be."

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• Even amid the spike higher for the dollar on Monday, the Swiss Franc remained relatively resilient through the session, keeping the USDCHF downtrend firmly intact. Despite multiple intra-day tests above the 20-day EMA, the pair continues to respect this average on a closing basis. Furthermore, moving average studies remain in a bear-mode position highlighting a dominant downtrend.
• The resumption of weakness continues to threaten a test of key support at 0.8040, the Apr 21 low. A break of this bear trigger would confirm a resumption of the medium-term technical downtrend and open the 0.8000 handle, and 0.7927, the 1.50 projection of the May 1 - Sep 6 2024 - Jan 13 price swing.
• Last week’s comparatively hawkish SNB may be providing an additional Franc tailwind here, with only a 25% chance of a September rate cut currently priced in. Furthermore, the Citi Broad REER Index remains comfortably off the April highs, potentially providing the committee with fewer short-term concerns regarding excessive Franc strength.
• In order to signal a potential reversal to the USDCHF trend, a clear break of the 50-day EMA would be required, currently intersecting at 0.8285.