For the second day in a row, the CAD gave up minimal gains, as dollar strength was seen across the board. The USDCAD closed at parity 1.000 and remained its daily range of 90 pips. With it being a Friday, could we be in line for some profit taking today from all those CAD bulls?
Canada’s leading index came in better than anticipated yesterday, rising by 1.0%, after consensus was for an increase of 0.8%. This wasn’t too surprising – after all, Canada’s economy has been on a romp lately, which has caused even the Bank of Canada to be more optimistic…
Speaking of the BOC…
The BOC released its quarterly monetary policy report yesterday and once again reiterated statements from earlier this week that it may be time to start withdrawing economic stimulus measures. Remember, earlier this week, the USDCAD dropped by over 100 pips once news broke out that the central bank would most likely hike interest rates before the end of the second quarter.
While yesterday’s statements didn’t provide any definite dates as to when the cash rate will be raised, chances are we might not see as strong reactions to interest rate rumors as we have seen in the past. As my buddy Forex Gump said in a recent post, the markets have probably started pricing in potential rate hikes, and we could see the USDCAD continue to hover around parity.
With that said, we could see some strong moves tonight, as we’ve got some top tier data coming out. First, at 11:00 am GMT, monthly consumer price index figures will be released. Forecasts are for a rise in the prices of consumer goods by 0.2% last month, while core data – which excludes the eight most volatile items – is seen to have risen by 0.1%. If we see more confirmation that inflation is on the rise, it would give even more reason for the BOC to hike rates sooner rather than later.
Later on, at 12:30 pm GMT, we’ve got retail sales figures on the docket. Headline retail sales are expected to have grown by 0.9% in February, while core sales (which doesn’t include automobile sales) are projected to have risen by 0.7%. Better than anticipated retail sales figures could give CAD bulls the energy it needs to take the USDCAD pair to a new yearly low.