Loonie still expected to appreciate moderately – Commerzbank
|The Canadian Dollar’s (CAD) reaction to the latest inflation print for December was rather muted. Economists at Commerzbank analyze Loonie’s outlook.
The BoC is unlikely to cut rates soon
The figures did not surprise to the extent that the Bank of Canada (BoC) is likely to discuss a rate hike again next week. At the same time, however, the figures confirm our view that the BoC is likely to take a wait-and-see approach and is therefore unlikely to cut rates in the near future.
The market still seems to think otherwise and, despite the surprise, expects the first rate cuts in the spring. Together with the small number of participants, this probably explains the moderate reaction of the CAD.
Given the more hawkish BoC and the fact that core inflation is once again proving surprisingly resilient, we would still be somewhat cautious. Accordingly, we remain comfortable with our forecast of a moderately appreciating CAD even after Tuesday's figures.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.