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Gains for the Canadian dollar end week

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The US and Canadian markets will be closed Monday. We are not seeing any movement in USD/CAD as we start the new trading week.

Canada’s GDP stays steady

Friday was a busy day ahead of Christmas. Canada’s GDP remains steady, with a modest 0.1% gain in November, identical to the October release. The fourth quarter GDP growth rate is 1.2% y/y. Although not a spectacular result, it is nevertheless respectable. More importantly, the reading is higher than the Bank of Canada’s forecast of 0.5% growth in Q4.

There had been speculation that the Bank of Canada might pause its current tightening cycle at the January meeting, but this now seems unlikely, due to the stronger-than-expected GDP and last week’s mixed inflation report. Although headline inflation fell to 6.8% from 6.9%, core inflation is still higher than expected. According to the BoC, future rate increases will be dependent on data and it is unlikely that the Bank will pause while inflation and GDP are increasing. After the GDP release, the odds of a 25-basis points increase in January rose to just below 66%.

US PCE Price Index declines

There is a sign that inflation in the US has been decreasing, raising hopes…



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