- USD/CAD rises to new four-year high near 1.4200 ahead of BoC monetary policy announcement and US inflation.
- The US core CPI is estimated to have grown steadily by 3.3% in November.
- Investors expect the BoC to cut interest rates by 50 bps on Wednesday.
The USD/CAD pair posts a new four-year high near the 1.4200 round resistance level in the European session on Tuesday. The Loonie pair strengthens as the US Dollar (USD) rises ahead of the United States (US) Consumer Price Index (CPI) data for November, due to be released on Wednesday. The Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, renews a two-day high at 106.35.
The inflation data is expected to influence market expectations for the Federal Reserve’s (Fed) likely interest rate action at the December 18 monetary policy meeting. According to the CME FedWatch tool, the Fed is widely anticipated to cut its key interest rates by 25 basis points (bps) to 4.25%-4.50% next week.
Economists expect annual headline inflation to have accelerated to 2.7% from October’s reading of 2.6%. Over the same period, the core CPI – which excludes volatile food and energy prices – is expected to have risen steadily by 3.3%. The headline CPI and the monthly core CPI are estimated to have grown steadily by 0.2% and 0.3%, respectively.
Signs of cooling price pressures would accelerate the Fed’s dovish bets for next week’s policy meeting. On the contrary, high inflationary pressures would weaken them.
Meanwhile, the outlook for the Canadian Dollar (CAD) remains weak as investors expect the Bank of Canada (BoC) to cut interest rates again by 50 basis points (bps) to 3.25% at the monetary policy meeting. Wednesday.
A significantly lower unemployment rate and price pressures contained within the bank’s 2% target have led to dovish bets on the BoC.
Economic indicator
BOC interest rate decision
He Bank of Canada announces the interbank interest rate. This rate affects a range of interest rates set by commercial banks, building societies and other institutions for their own borrowers and depositors. It also affects exchange rates. If the Bank of Canada is firm on the economy’s inflationary outlook and raises rates, this is bullish for the Canadian dollar, while an outlook for reduced inflationary pressures will be bearish.
Next post:
Wed Dec 11, 2024 2:45 p.m.
Frequency:
Irregular
Dear:
3.25%
Previous:
3.75%
Fountain:
Bank of Canada
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.
