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Travel Flows Between Canada and the U.S. Expected To Stay Restrained While Gas Prices Stay Elevated, says BMO
Canadian travellers continue to dig their heels in at the border with the United States, said Bank of Montreal (BMO).The post-pandemic recovery in southbound travel by Canadians was stopped in its tracks in late 2024, and further deteriorated in 2025 as Canada-U.S. tensions flared on annexation threats and tariffs, noted the bank.While travel to the U.S. ticked up ever so slightly in the early part of 2026, it continues to languish at less than three-quarters of 2024 levels, pointed out BMO. The state of the bilateral relationship remains fluid and the recent spike in fuel prices has added another tailwind, the bank said.In contrast, U.S. travel to Canada has recovered from a much smaller dip in 2025. As of 2026, travel in this direction is above 2024 levels, although modestly, BMO noted.Travel flows in both directions are expected to stay restrained as long as gasoline prices remain elevated, added the bank.Still, even beyond a normalization in those prices, Canadian travellers may continue to be reluctant to go to the U.S. until the bilateral relationship stabilizes, according to BMO.
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Canada's Friday Producer Prices May Further Inform on Pass-Through to Consumers, says Scotiabank
Canada updates industrial producer (IPPI) and raw materials (RMPI) prices with April readings at 8:30 a.m. ET on Friday, and it may inform on lagging consumer pass through, notes Scotiabank."The broad trend to the volatile readings is unambiguously pointed higher and suggests pass through risk into consumer prices with a lag," said the bank, adding: "What happens to the consumer price index and core CPI will be patiently observed as Scotiabank remains at a highly nascent stage for evaluating inflationary pressures driven by pre Iran war and wartime influences."
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BMO on The Day Ahead in Canada
Canada will release the retail sales for March and the preliminary April figure at 8:30 a.m. ET on Friday, said Bank of Montreal (BMO).Consumers, who have been relatively resilient against a number of headwinds in recent years, face yet another shock in the Iran war and its resulting spike in energy prices, stated the bank.BMO noted that, while it expects retail sales increased in March -- the bank's call of 0.5% month over month is a tenth softer than Statistics Canada's flash estimate -- it suspects the strength was largely driven by higher gasoline prices. Auto sales were a touch softer in the month, so sales excluding autos look to rise 1.0%.Still, non-discretionary spending could take a hit as more household budgets are allocated to essentials like gasoline and home heating. Highlighting that point, BMO wouldn't be surprised to see an outright decline in spending volumes. The April flash estimate will provide a clue to the direction of spending beyond the immediate outbreak of the Iran warInvestors will also get industrial product (IPPI) and raw materials (RMPI) prices for April at 8:30 a.m. ET Friday, with both expected to post "chunky" monthly increases, given the higher commodity prices, added the bank.The Bank of Canada's Senior Loan Officer Survey for Q1 will be released at 10:30 a.m. ET.The recent backup in bond yields isn't helping housing markets in Canada or the United States, according to BMO. In Canada, the bank advises watching for buyers -- or the wave of those renewing -- to shift further into variable rates with the Bank of Canada on hold, possibly for the year.That will come as fixed mortgage rates get pulled higher by the recent rise in the government of Canada (GoC) yields. In the U.S., the 30-year mortgage rate rose to 6.5% this week, or the highest level since last summer. Both markets look to remain quiet in the months ahead.
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