USD/CAD Canadian Dollar Lower Despite Strong Inflation

The Canadian dollar is lower against the US dollar on Friday. The fall of oil prices and the tepid growth of retail sales combined with the safe haven appeal of the big dollar ahead of the weekend put the loonie in a tough spot.

Canada’s CPI showed an unexpected 0.3 percent gain, keeping the inflation rate above the 2 percent target of the Bank of Canada (BoC). Markets forecast a 23 percent probability of a rate hike, as other factors will keep the central bank from pulling the trigger on higher interest rates.

usdcad Canadian dollar graph, November 23, 2018

Oil prices continue to tumble as oversupply concerns are far outweighing any possible production output deal by the OPEC and other major producers. Trade concerns are boosting the US dollar as protectionist measures are more likely to be scaled up than down.

The USMCA agreement shields Canada from trade uncertainty, but does not make the loonie immune to the greenback rising on risk aversion flows.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza