USD/CAD has damaged under 1.28. In Canada, right this moment’s CPI ought to endorse extra hikes, that are set to underpin the loonie, economists at ING report.
Inflation information unlikely to have an effect on BoC coverage expectations
“The market is anticipating some indicators that the headline charge has peaked (at 6.7% YoY), which might indicate a month-to-month enhance of 0.5% in April. Core measures could nonetheless proceed to inch marginally greater. Barring main surprises within the information right this moment, we suspect that the impression on the Financial institution of Canada’s charge expectations and on the Canadian dollar might be restricted.”
“USD/CAD ought to proceed to weaken if we see additional indicators of stability in world sentiment right this moment.”
“Crucially, the speed and development differential that will curb EUR/USD do not apply to CAD vs USD given a hawkish BoC and powerful development in Canada, which implies that a rally within the loonie ought to show extra sustainable than the EUR/USD one.”
“We proceed to focus on sub-1.25 ranges in USD/CAD by the second half of the yr.”