USD/CAD: Weak Canadian inflation to put selling pressure on the Loonie – Commerzbank

Today's focus will be on Canadian Consumer Price Index (CPI) report. Weak figures could weigh on the Loonie, but losses should be limited, economists at Commerzbank report.

The final piece of the jigsaw?

“Today’s Canadian inflation data for December might form the last piece of the jigsaw in the Bank of Canada’s (BoC) decision next week as to if it will hike its key rate, and if so by how much. The market largely expects 25 bps, but also sees a chance of unchanged key rates.”

“If the inflation data is surprisingly weak today, the market might further lower its rate hike expectations which could put selling pressure on the Canadian dollar against the USD. On the other hand, the US dollar is not in particular demand at present either so the CAD losses should be limited.”

See – Canadian CPI Preview: Forecasts from six major banks, inflation steering into calmer waters