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USD/CAD: A surprisingly hawkish BoC might provide further support to Loonie – Commerzbank

USD/CAD: A surprisingly hawkish BoC might provide further support to Loonie – Commerzbank

Canadian Consumer Price Index (CPI) growth slowed further in December. Loonie rose after the data. A hawkish Bank of Canada next week could provide furthe support.

CAD stronger following publication of inflation data

“Even though the overall rate eased a little more than expected to 6.3% (Bloomberg 6.4%), and the core rates (median and trim) eased slightly to 5.0% and 5.3% respectively (Bloomberg: 4.9% and 5.2% respectively), the previous month’s result was corrected to the upside. That means the impression of an overall rate slowly easing is confirmed, as is the image of a core rate still stubbornly moving sideways above 5%.”

“Just like the (small) majority of analysts polled by Bloomberg we expect the BoC to take a further step of 25 bps to then 4.5% at its meeting next week. This seems to have been increasingly priced in by the market.”

“The Loonie was able to benefit from yesterday’s inflation data. A surprisingly hawkish BoC might provide further support, in particular if the other central banks surprise on the dovish side.”

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Greg Aftayev

Greg Aftayev is a Journalist at Flaunt Weekly Covering Tech News.

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