Canada, Inflation and Raising Hope
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The Canadian dollar hit its lowest in almost three weeks against its U.S. counterpart on Tuesday as oil prices fell and cooler domestic inflation data raised expectations the Bank of Canada would cut interest rates in the coming months.
Here’s how implied probabilities of future interest rate moves stood in swaps markets moments after the 830 am ET data, according to LSEG data. While the bank moves in quarter-point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.
The USD/CAD pair posts modest gains near 1.3870 during the early Asian session on Wednesday. The Canadian Dollar (CAD) weakens against the US Dollar (USD) as cooler Canadian inflation data raised expectations that the Bank of Canada (BoC) would cut interest rates in the coming months.
Inflation eased slightly in July, but core measures remain sticky, leaving economists doubtful the Bank of Canada will change course in September.
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