The USD/CAD currency pair made a minor rebound on Thursday. It has eased back to the neighborhood of 1.3770, after printing a daily low near 1.3756 during the day’s session. This meager recovery comes even as the US dollar rallies. This stabilization comes on the heels of the most disappointing Consumer Price Index (CPI) report in recent memory. According to market analysts, investors are betting on the Federal Reserve making at least two rate cuts next year. This expectation might be a major force shaping currency moves for months to come.
Last week, the Bank of Canada (BoC) held its rate of interest at 2.25%. If correct, this decision would suggest that the BoC believes its policy is already “about the right level.” The decision reflects the BoC’s assessment of inflation rates, which have remained close to target, alongside signs of resilience in the Canadian economy. Most significantly, Canada’s core CPI, which strips out the more-volatile food and energy prices, decelerated to 2.6% y/y from 3.0%. This month-over-month decline is an encouraging sign that inflationary pressures continue to abate. This loosening might have given the BoC more support to hold rates steady.
As traders learn to cope with these developments, the focus now turns to a slew of economic data in the days ahead that may continue to move markets. Following close on the heels of release in Canada are Retail Sales figures, which will further help to dissect retail trends and impact on the overall economy. Here in the United States, Existing Home Sales data are due out shortly. At the same time, we’ll get the University of Michigan Consumer Sentiment and Consumer Expectations indices. These are extremely important indicators because they’re the most direct measures of consumer confidence and consumer purchasing behavior, both fundamental to gauging the strength in any economic growth.
Lastly, the one-year and five-year inflation expectations surveys come out in the U.S. These surveys are important measures of public attitude about inflation persistence, and they can provide a unique window into the potential future trajectory of monetary policy.
The heat map shows some of the largest percentage advance or decline changes across the globe with every major currency. It shows the performance of USD, EUR, GBP, JPY, CAD, AUD, NZD and CHF. Our latest data snapshot highlights those shifting market trends. It provides traders with critical context to address today’s complex economic landscape.