- USD/CAD holds gains near 1.4280 as soft Canadian inflation data has boosted the need for more BoC interest rate cuts.
- Annual headline CPI rose at a slower pace of 1.9% in November. In the month, it remained flat.
- US Retail Sales grew sharply by 0.7%. Investors await the key Fed policy meeting.
The USD/CAD pair remains firm near 1.4280 in Tuesday’s North American session after the release of the Canadian inflation and the United States (US) monthly Retail Sales data for November.
The cooler-than-expected November Canadian inflation report has cemented expectations of further policy easing by the Bank of Canada (BoC) in 2025.
The inflation report showed that the headline Consumer Price Index (CPI) rose by 1.9%, slower than estimates and the prior release of 2%. Month-on-month headline inflation remained flat, as expected. In October, the monthly headline CPI rose by 0.4%.
BoC’s preferred core CPI measure -which excludes eight volatile items – decelerated to 1.6% from 1.7% in October. On month, the BoC preferred inflation measure deflated by 0.1%.
Meanwhile, the US Dollar (USD) ticks higher after the release of the better-than-projected US Retail Sales data. Retail Sales, a key measure of consumer spending rose by 0.7%, faster than estimates and the prior release of 0.5%.
Going forward, the major event for the US Dollar will be the Federal Reserve’s (Fed) interest rate meeting on Wednesday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.25%- 4.50%, its third cut in a row.
Investors will pay close attention to comments by Fed Chair Jerome Powell to determine whether the central bank will temporarily pause the policy-easing process at the start of 2025. According to the CME FedWatch tool, there is an almost 80% chance that the Fed will leave interest rates unchanged at 4.25%- 4.50% in the policy meeting in January.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0400 after upbeat US data
EUR/USD consolidates daily recovery gains near 1.0400 following the release of upbeat United States data. Q3 GDP was upwardly revised to 3.1% from 2.8% previously, while weekly unemployment claims improved to 220K in the week ending December 13.
GBP/USD drops toward 1.2550 after BoE rate decision
GBP/USD stays on the back foot and declines toward 1.2550 following the Bank of England (BoE) monetary policy decisions. The BoE maintained the bank rate at 4.75% as expected, but the accompanying statement leaned to dovish, while three out of nine MPC members opted for a cut.
Gold approaches recent lows around $2,580
Gold resumes its decline after the early advance and trades below $2,600 early in the American session. Stronger than anticipated US data and recent central banks' outcomes fuel demand for the US Dollar. XAU/USD nears its weekly low at $2,582.93.
Bitcoin slightly recovers after sharp sell-off following Fed rate cut decision
Bitcoin (BTC) recovers slightly, trading around $102,000 on Thursday after dropping 5.5% the previous day. Whales, corporations, and institutional investors saw an opportunity to take advantage of the recent dips and added more BTC to their holdings.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.