USD/CAD: Risks appear slightly skewed to the upside for loonie today – ING
|USD/CAD is advancing above 1.3750 ahead of the Canadian inflation data. Economists at ING believe that the loonie could see some gains today.
Inflation to steer rate expectations
“We still want to highlight how the Canadian dollar is in a good position to benefit from any recovery in risk sentiment (although that may only materialise from 1Q23 onwards), thanks to Canada’s limited exposure to the two major poles of geopolitical and economic risk: Russia and China. But growing uncertainty about global demand dynamics may further postpone any strong rebound in the loonie.”
“Today, September CPI numbers will be published, and the consensus is centred around a slowdown in headline inflation from 7.0% to 6.7%. With markets currently pricing in 60 bps ahead of next week’s meeting, any upside or downside surprise can definitely direct rate expectations towards 50 bps or 75 bps, and generate CAD volatility in both directions.”
“The balance of risks appears slightly skewed to the upside for CAD today, but there is still room for USD/CAD appreciation (1.38-1.40) into year-end.”
See – Canadian CPI Preview: Forecasts from seven major banks, signs of easing price pressures?
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