Economists at ING believe that the loonie could attract some gains today as the USD/CAD currency pair progresses above 1.3750 ahead of the Canadian inflation data.
Canada’s limited exposure to the two significant poles (Russia and China) of geopolitical and economic risk keeps the Canadian dollar in a good position to benefit from any recovery in risk sentiment. However, the climaxing uncertainty concerning global demand dynamics may further delay any strong rebound in the loonie.
The September CPI numbers will be published today, and the consensus is centered around a reduction in headline inflation from 7.0% to 6.7%. However, according to the ING economists, considering the current market pricing at 60 bps ahead of next week’s meeting, any substantial change can direct rate expectations toward 50 bps or 75 bps and produce CAD volatility in both directions.
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