- USD/CAD depreciates as BoC Governor Macklem signals a more gradual approach to the policy outlook if the economy broadly evolves.
- Broad market sentiment remains stable after US inflation figures came in line with market expectations.
- Traders are looking forward to US November Producer Price Index (PPI) data, due out on Thursday, to gain fresh momentum.
USD/CAD extends its losses for the second consecutive day, trading around 1.4150 during the Asian session on Thursday. The USD/CAD pair continues its pullback from Wednesday’s high of 1.4194, the highest level since April 2020. This drop is due to the strengthening of the Canadian Dollar (CAD) as the Bank of Canada (BoC) signaled a higher pace slow of future interest rate cuts following his recent decision.
On Wednesday, the Bank of Canada implemented another substantial rate cut of 50 basis points, bringing the main interest rate to 3.25%. With Canada’s unemployment rate hitting multi-year highs, the BoC has every reason to ignore recent increases in inflation.
Bank of Canada (BoC) Governor Tiff Macklem stated: “We anticipate a more gradual approach to monetary policy if the economy broadly evolves as expected.” Macklem also said monetary policy no longer needs to be clearly in restrictive territory.
Broad market sentiment remains balanced after US CPI inflation figures came in line with market expectations on Wednesday. The US Consumer Price Index (CPI) rose to 2.7% year-on-year in November from 2.6% in October. The headline CPI reported a reading of 0.3% month-on-month, in line with market consensus. Meanwhile, core CPI, which excludes volatile food and energy prices, rose 3.3% year-on-year, while core CPI rose 0.3% month-on-month in November, as expected.
This latest US inflation report does not appear to be enough to prevent the Federal Reserve (Fed) from cutting rates at its December meeting next week. Traders await the release of the US November Producer Price Index (PPI) for fresh impetus, due out later on Thursday. The CME’s FedWatch tool suggests a nearly 99% probability of Fed rate cuts by 25 basis points on December 18.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
