USDCAD Falls to Lowest Level in 3 Months Following Inflation Data

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USDCAD Falls to Lowest Level in 3 Months Following Inflation Data
Credit: © Reuters.

By Sam Boughedda

Investing.com — Canadian CPI data came in above expectations Wednesday, sending the USD/CAD to its lowest level in three months.

The monthly CPI came in at 0.2%, above the 0.1% consensus while the yearly was reported at 4.4% against the expected 4.3%. The yearly rate was at an almost two-decade high. 

Speaking to Bloomberg, Derek Holt, an economist at the Bank of Nova Scotia, said he believes the Bank of Canada will raise its benchmark rate on four occasions in the second half of 2022 and an additional four times the next year as the inflation Canada is seeing isn't transitory.

Canada's rates are currently at 0.25%, and the inflation number may cause the BoC to rethink its rate plan. 

With the USDCAD sliding to a three-month low of 1.2307 on Wednesday, traders look to be betting that the central bank will be forced into raising rates earlier than expected, much like we have seen with the GBP and Bank of England. 

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