The reaction of the Canadian Dollar (CAD) to the latest December inflation figures was rather muted. The economists of Commerzbank They analyze the Loonie's prospects.
Bank of Canada unlikely to cut rates anytime soon
The numbers did not surprise to the point that the Bank of Canada (BoC) is likely to discuss a rate hike again next week. At the same time, however, the figures confirm our view that BoC likely to take wait-and-see approach and is therefore unlikely to cut rates in the near future.
The market seems to continue thinking the opposite and, despite the surprise, expects the first rate cuts in spring. Together with the small number of participants, this probably explains the moderate reaction of the CAD.
Given that the Bank of England has been more critical and that core inflation is once again surprisingly resilient, we would remain cautious. Consequently, we maintain our forecast for a moderate appreciation of the CADeven after Tuesday's figures.
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.
