Canada’s economic docket featured the release of inflation data, which decreased below the 3% threshold on annual figures. On a monthly basis, the Consumer Price Index (CPI) saw a 0.3% rise, below the consensus of 0.6%. The Bank of Canada’s (BoC) preferred measure of inflation, the core CPI, slowed in the 12 months to February, from 2.4% to 2.1%.
The data sent the USD/CAD rallying amid speculations that the BoC might cut rates sooner than expected. In the meantime, money market futures data suggest that the odds for the first rate cut by the BoC in the June meeting lie at 73.0%, according to Capital Edge and Refinitiv data.
The US housing sector shows signs of strengthening according to recent economic data. Building Permits in February rose by 1.9% month-over-month, from 1.489 million to 1.496 million. Meanwhile, Housing Starts for the same period saw a significant increase of 10.7%, surpassing the expected 8.2%.
USD/CAD traders brace for Wednesday’s Federal Open Market Committee (FOMC) decision. Futures data shows that the Fed holding rates are unchanged, though uncertainty lies in the update of their Summary of Economic Projections (SEP). Some analysts suggest Fed policymakers could disregard one rate cut, keeping rates higher for longer.
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