Commerzbank economists analyze the outlook for the CAD ahead of inflation data from Canada.
CAD likely to struggle to gain ground
September inflation data released today could clarify whether the BoC would need to take further action. According to the Bloomberg consensus, an improvement in inflation data is not expected. In this context, speculation about new rate hikes could continue. The BoC keeps the door open to this due to persistently high underlying inflation. In principle, this could support CAD.
However, in the current environment, the CAD is likely to struggle to gain ground. Strong US economic data supports the USD. Additionally, the USD benefits from increased uncertainty due to the conflict in the Middle East. This means that a sustainable recovery of the CAD against the USD seems unlikely for now.
Source: Fx Street
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