The data added to the Canadian Dollar’s selloff as they downplayed risks for further tightening from the BoC
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Crude oil related loonie has weakened recently and two crucial macro events take place on Tuesday. We asked HF Markets' analyst what does she expect from Canadian dollar this week.
This week's data have proven very interesting as they back the BoC scenario for pausing its policy tightening
Andria Pichidi (Market Analyst at HF Markets): The BoC announced a pause in rate hikes at its January policy meeting, while the hot January and December employment reports gave rise to fears that the Bank will have to resume rate hikes. However this week's data have proven very interesting as they back the BoC scenario for pausing its policy tightening.
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US dollar against Canadian dollar - next resistance area stands at 1.3540-1.3570
Inflation is down +0.5% m/m vs +0.7% expected and headline core 5.0% y/y vs 5.5% expected. CPI is down on a y/y basis, slipping to 6.3% in December and has decelerated from the 8.1% y/y in June which was the fastest since 1983. Also, retail sales popped 0.5% in January. The data added to the Canadian Dollar’s selloff as they downplayed risks for further tightening from the BoC. The rates market was pricing in a 25% chance of a Bank of Canada hike on March 8. USDCAD rose to 1.3500 from 1.3455 after the report. Next Resistance area stands at 1.3540-1.3570.
