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.
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.