Canada\u2019s core Consumer Price Index (CPI) was 0% month-on-month in March. The previous reading was 0.2% month-on-month.<\/p>\n
This means core prices were unchanged from February to March. The monthly pace eased by 0.2 percentage points compared with the prior month.<\/p>\n
This flat 0% core inflation print for March is a significant dovish signal. It powerfully suggests that the disinflationary trend we saw through 2025 is accelerating. We must now price in a much higher probability of a Bank of Canada rate cut at the next meeting in June.<\/p>\n
We are adjusting our positions in CORRA futures, anticipating the forward curve will shift to reflect earlier easing. This situation reminds us of the market pivot in mid-2025 when the first hints of a peak policy rate emerged. The current overnight rate, which has held at 3.5% for two quarters, now looks restrictive and poised for a downward move.<\/p>\n
Consequently, we see significant downward pressure on the Canadian dollar. We are increasing our long positions in USD\/CAD through call options, targeting a move above the 1.38 level last seen in late 2025. This view is strengthened by recent data from the U.S. showing their core inflation remains stickier, currently running at an annualized pace of 2.8%, creating a clear policy divergence.<\/p>\n
For equity derivatives, this outlook is bullish, particularly for rate-sensitive sectors on the S&P\/TSX 60. We are looking at call options on financials and utilities, which underperformed during the hiking cycle of 2024 and 2025. The prospect of lower borrowing costs should provide a significant tailwind for these names in the coming quarter.<\/p>\n","protected":false},"excerpt":{"rendered":"
Canada\u2019s core CPI was flat in March, easing to 0% month-on-month from 0.2% previously.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45394","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45394"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45394\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}