TD Securities forecasts July CPI at 2.9% y/y and warns of potential 50% US tariffs on $20bn of Canadian exports.
Canadian markets face near-term risks from July CPI data and looming US Section 338 tariffs on $20bn of exports. TD Securities projects headline inflation at 2.9% year-on-year, up 0.1pp, driven by food and energy price increases.
Core CPI is expected to hold at 1.85% y/y, slightly below the Bank of Canada’s July projections. Retail sales are forecast to remain flat for June, while the BoC is anticipated to maintain its Overnight Rate at 2.25% through 2026.
Negotiations between Canadian and US officials aim to avert the 50% tariff deadline set for Wednesday, adding pressure to the Canadian dollar.