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Canadian dollar daily update for 22nd December 2017

BY DEB SHAW | 

The Canadian dollar strengthened sharply yesterday and continues to gain this morning. The currency benefited from both higher-than-expected retail sales figures as well as better-than-expected headline inflation. As growth and inflation-related data is better than expected, the odds of a future rate hike are increasing as a result. Today, markets will be closely watching October GDP growth figures. Expectations are high, with the consensus estimate at 0.2% for month-over-month GDP growth. Following recent CAD strength, we expect to upgrade our short-term outlook to neutral shortly. Our medium-term outlook remains bearish.   

The USD/CAD exchange rate is currently above 1.2720. The euro is down against the Canadian dollar. EUR/CAD is currently above 1.5070. Lastly, the pound is down against the Canadian dollar, with GBP/CAD trading above 1.7010. 

This week’s economic data and events relating to the Canadian dollar include inflation and GDP growth. Retail sales beat expectations by a wide margin (1.5% vs. 0.3% expected) while November headline CPI (2.1% vs. 2.0% expected) and core CPI (1.3%) were also strong. Later today, we’ll see October GDP growth. Last week, the Canadian dollar rallied after Poloz suggested that the economy had made “tremendous” progress.

Updated 
Outlook
Neutral

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