Canadian CPI October 2014

On Friday we will get another look at consumer inflation out of Canada for the month of October. The CPI is expected to show a contraction of 0.2% while the core CPI is expected to increase by 0.2%. Annualized inflation is expected to remain unchanged at 2.0% and 2.1%. Sine annualized inflation is not moving and hovering at the 2.0% level the Bank of Canada is comfortable with I do not expected heavy movements out of the Canadian Dollar to end the week. I do think that the CAD is weaker than it should be especially compared to the USD.

I think the Bank of Canada may raise interest rates next year and well ahead of the US. I am very bearish on USDCAD and think we may break below parity over the next 12 to 16 months.