- The Canadian Dollar has halted its prolonged decline.
- In September, Canada experienced a rise in CPI inflation, driven by the Bank of Canada.
- However, this pause may be short-lived, as CAD bulls continue to be hard to find.
The Canadian Dollar (CAD) has finally managed to stabilize, halting a decline against the US Dollar that saw the Loonie drop over 3% in a multi-week bear market that began last month. However, despite this pause, the CAD continues to face challenges, lacking a strong rebound as USD/CAD remains stuck near the 1.3800 level.
In September, Canada’s Consumer Price Index (CPI) headline inflation decreased, while the Bank of Canada’s (BoC) own CPI measures increased during the same period. Nevertheless, market sentiment remains focused on expectations of a 50 basis point rate cut from the BoC later this month.
Daily Digest: Market Movers
- Headline Canadian CPI inflation eased to 1.6% year-over-year in September, down from 2.0% and below the anticipated 1.8%.
- Despite the decline in headline inflation, the Bank of Canada’s (BoC) core annualized CPI inflation rose to 1.6% from 1.5%, indicating ongoing inflation pressures in core goods and services.
- Even with the increase in core CPI, analysts broadly expect the BoC to implement a 50 basis point rate cut later this month, which may limit CAD strength.
- There are no significant CAD data releases on the economic calendar for the rest of the trading week.
- The next BoC rate decision is scheduled for Wednesday, October 23.
Canadian Dollar Price Forecast
The Canadian Dollar has succeeded in halting its multi-week decline against the Greenback, keeping USD/CAD below the 1.3800 mark. However, the Loonie remains vulnerable to further weakness against the US Dollar due to the expected rate cut, with price action situated below the 200-day Exponential Moving Average (EMA) at 1.360.
USD/CAD Daily Chart
