Oct 19, 2022
VOT Research Desk
Before the Canadian inflation data is released, USD/CAD is rising beyond 1.3750. The loonie could rise today, according to ING economists.
We want to emphasize how Canada’s minimal exposure to the two main geopolitical and economic risk poles—Russia and China—puts it in a favorable position to profit from any revival in risk sentiment (even though it may only occur from 1Q23 forward).
However, rising skepticism over the fundamentals of global demand may further delay any significant Canadian dollar recovery.
The September CPI statistics will be released today, and the consensus predicts that headline inflation will decrease from 7.0% to 6.7%.
Markets are now pricing in 60 bps for the meeting next week, so any surprise to the upside or downside might easily shift expectations for rates to 50 bps or 75 bps and cause CAD volatility in both directions.
