The Canadian dollar was bolstered Friday by inflation data that outstripped economists’ expectations as the introduction of a carbon tax in Alberta and Ontario drove gasoline and natural gas prices higher.
This week will be chock-full of important news in Canada, particularly the Bank of Canada’s (BoC’s) key rate decision on Wednesday followed by its statement on monetary policy and the release of Gross Domestic Product (GDP) data on Thursday. Although BoC Governor Stephen Poloz stated in January that a rate cut was a possibility in 2017, markets anticipate that interest rates could rise this year, as recent economic data have been encouraging. Along the same lines, we expect to see fourth quarter GDP growth sustained by rising exports and consumption.
On Tuesday evening, we’ll be closely watching President Trump’s speech to Congress. The U.S. dollar, which is rising this morning, could react favourably if Trump moves forward with an expansionary fiscal policy.
