24 Jan 2014
USD/CAD declines ahead of Canadian CPI numbers
FXstreet.com (London) - USD/CAD is down on the session so far on some choppy trading ahead of the Canadian consumer price index report.
It is expected that year-on-year rates will strengthen from November’s reading of 0.9 percent, with consensus expectations at 1.3 percent. Expectations for core CPI are for a rise to 1.3 percent from November’s 1.1 percent reading.
Canadian inflation outlook remains weak
Despite expectations of an uptick in Canadian inflation numbers, price trends remain broadly weak and inflation is running a long way short of the Bank of Canada’s 2.0 percent target rate.
In the BoC’s statement accompanying this week’s rate decision, it emphasised concern over inflation. But while the BoC is a long way from hiking rates, abandoning previous governor Mark Carney’s stance, Stephen Poloz may be given helping hand by the Fed’s schedule of tapering its asset purchase programme down from its current USD75bn a month. As US bond yields rise, so will Canadian yields, rising Canadian long-term rates.
CAD upside capped
Any increase on the CPI expectations should trigger CAD buying. However, with Poloz quick to talk down CAD strength relative to the USD in a bid to import some price inflation, any CAD gains should remain capped.
USD/CAD is currently trading at CAD1.1085, down 0.14 percent on the day.
It is expected that year-on-year rates will strengthen from November’s reading of 0.9 percent, with consensus expectations at 1.3 percent. Expectations for core CPI are for a rise to 1.3 percent from November’s 1.1 percent reading.
Canadian inflation outlook remains weak
Despite expectations of an uptick in Canadian inflation numbers, price trends remain broadly weak and inflation is running a long way short of the Bank of Canada’s 2.0 percent target rate.
In the BoC’s statement accompanying this week’s rate decision, it emphasised concern over inflation. But while the BoC is a long way from hiking rates, abandoning previous governor Mark Carney’s stance, Stephen Poloz may be given helping hand by the Fed’s schedule of tapering its asset purchase programme down from its current USD75bn a month. As US bond yields rise, so will Canadian yields, rising Canadian long-term rates.
CAD upside capped
Any increase on the CPI expectations should trigger CAD buying. However, with Poloz quick to talk down CAD strength relative to the USD in a bid to import some price inflation, any CAD gains should remain capped.
USD/CAD is currently trading at CAD1.1085, down 0.14 percent on the day.