Canadian Dollar Nears One-Month Low
The Canadian dollar weakened towards 1.42 per USD on November 10th, nearing a one month low amid prospects of a wider US-Canada interest-rate differential. Hotter-than-expected US inflation data in October reinforced expectations of further Federal Reserve rate hikes, supporting the greenback against the loonie on prospects of carry trade into the US. Meanwhile, most market participants are also pricing in a Bank of Canada rate hike due to high inflation. In Canada, annual inflation rose to 3.1% in September from 3.0% in August, its highest level since May’s 3.2%. The increasing prices follow up on a recovering economy with Q2 GDP growth soaring to 0.8%, while the Democratic Party victory in US mid-term elections could soften trade pressures on Canadian growth. Limiting the hawkish certainty, employment fell by 4,700 in October, missing expectations for a 13,600 increase. At its latest meeting, the BoC raised rates by 25 bps to 2.5%, its first hike since 2023.
The Canadian dollar weakened towards 1.42 per USD on November 10th, nearing a one month low amid prospects of a wider US-Canada interest-rate differential. Hotter-than-expected US inflation data in October reinforced expectations of further Federal Reserve rate hikes, supporting the greenback against the loonie on prospects of carry trade into the US. Meanwhile, most market participants are also pricing in a Bank of Canada rate hike due to high inflation. In Canada, annual inflation rose to 3.1% in September from 3.0% in August, its highest level since May’s 3.2%.
The increasing prices follow up on a recovering economy with Q2 GDP growth soaring to 0.8%, while the Democratic Party victory in US mid-term elections could soften trade pressures on Canadian growth. Limiting the hawkish certainty, employment fell by 4,700 in October, missing expectations for a 13,600 increase. At its latest meeting, the BoC raised rates by 25 bps to 2.5%, its first hike since 2023.