Economists at Commerzbank discuss how the inflation data due in Canada today could impact the Loonie.

Moves in USD/CAD seemed to be dominated by concerns about the US debt ceiling

“If inflation rates are in line with consensus expectations or slightly below, this is likely to change BoC rate expectations and the Loonie only very marginally. The OIS expectations signal that the market is only pricing in a small chance of further rate hikes and continues to expect rate cuts for year-end.”

“If, contrary to expectations, inflation were to surprise on the upper end though, this might fuel expectations that the BoC will leave interest rates at current levels of 4.5% for longer or might need to take further action. If this reduces the gap between Fed an BoC expectations, in particular, the Loonie would benefit.” 

“Most recently the moves in USD/CAD seemed to be dominated by concerns about the US debt ceiling though.”

See – Canadian CPI Preview: Forecasts from five major banks, inflation likely to ease again