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Tim Riddell, senior market strategist at Westpac, points out that Canada’s CPI managed to hold steadier than markets had feared and so saw some pulling back in expectations for a more notably dovish BoC.

Key Quotes

“There are few signs of upside inflationary pressures building. Global trade and growth concerns will continue to be a key concern for BoC on 4th Sep as will the prospects of further FOMC cuts and ECB easing. Retail sales have peeled back from their spike higher in March and the June report is expected to show little in the way of rebound.”

“The past month has also seen a notable lift in US policy shifts from Trump’s tweets as he seeks to bolster his core electoral support. G7’s climate and inequality agendas may frustrate Trump and see him lash out through trade tariffs which could be directed at Canada if Trudeau choses to bolster his green credentials in front of October’s election.”

“Although oil has been steadier, it remains prone to global growth concerns and so the near term support for CAD from oil and CPI may well be short lived as USD/CAD trends towards 1.3600.”