USD/CAD: A surprisingly hawkish BoC might provide further support to Loonie – Commerzbank

FXStreet Insights Team FXStreet

Canadian Consumer Price Index (CPI) growth slowed further in December. Loonie rose after the data. A hawkish Bank of Canada next week could provide furthe support.

CAD stronger following publication of inflation data

“Even though the overall rate eased a little more than expected to 6.3% (Bloomberg 6.4%), and the core rates (median and trim) eased slightly to 5.0% and 5.3% respectively (Bloomberg: 4.9% and 5.2% respectively), the previous month’s result was corrected to the upside. That means the impression of an overall rate slowly easing is confirmed, as is the image of a core rate still stubbornly moving sideways above 5%.”

“Just like the (small) majority of analysts polled by Bloomberg we expect the BoC to take a further step of 25 bps to then 4.5% at its meeting next week. This seems to have been increasingly priced in by the market.”

“The Loonie was able to benefit from yesterday’s inflation data. A surprisingly hawkish BoC might provide further support, in particular if the other central banks surprise on the dovish side.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD bounces off four-day lows, still below 1.3500

GBP/USD sticks to the bearish tone on Thursday, coming down to the 1.3480 region in the latter part of the NA session. In the meantime, Cable’s weakness comes as investors continue to assess mixed UK data, poor US results, and the persistent uncertainty surrounding the US-Iran conflict.

EUR/USD looks apathetic around 1.1530

EUR/USD reverses Wednesday’s downtick and trades with modest gains in the 1.1530 region following the end of the NA session on Thursday. The pair’s tepid advance comes on the back of the absence of clear direction in the US Dollar despite tensions from the Middle East appear far from alleviated. Later on Friday, investors are expected to monitor the the releases of another revision of GDP figures in the Euroland, US Retail Sales and the preliminary U-Mich gauge.

Gold remains on the defensive below $4,350; downside seems cushioned

Gold trades below $4,350 during the Asian session on Friday and looks to extend the previous day's pullback from the highest level since June 5 as the US-Iran standoff continues to underpin the US Dollar's reserve-currency status. However, reduced bets for an immediate Fed rate hike, amid signs of cooling US inflation, should act as a tailwind for the non-yielding bullion and help limit deeper losses.

Dogecoin reclaims $0.07 support as whales step in

Dogecoin (DOGE) edges above the daily open, trading above $0.070 as of Thursday. While this uptick offers a positive signal, DOGE continues to trade within a broader bearish context, down approximately 12% from its July peak of $0.079. Still, should the $0.070 support level hold, the mild recovery could gather pace, targeting resistance at $0.080 and potentially the key $0.100 threshold.

Why credit markets aren’t pricing $570B of AI debt

Forecasts put global artificial intelligence related debt issuance near $570 billion this year, with roughly $236 billion of it priced by the end of May at four times the prior year's pace. Data centre securitisation alone has gone from about $4 billion a year through 2022 to roughly $10 billion in each of 2023 and 2024, and then $27 billion in 2025.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.