USDCAD to drop temporarily if Canadian inflation surprise on the upside – Commerzbank

Today, investors will pay close attention to October Consumer Price Index (CPI) figures from Canada. Economists at Commerzbank discuss how the Loonie could react to the inflation report.

Surprisingly weaker Canadian inflation data would put pressure on the CAD

“Last week surprisingly lower US inflation data had supported the pricing out of USD strength which also benefitted the loonie. Surprisingly weaker Canadian inflation data like in the US is likely to provide a dampener for BoC rate hike expectations on the market, which would put pressure on the Loonie.”

“We see the risk of a surprise on the upside. If the inflation data were to come in above expectations this would support rate hike expectations on the market, causing USDCAD to drop temporarily.”

See – Canadian CPI Preview: Forecasts from four major banks, a detour from the path towards slower inflation