In testimony to Congress yesterday, Fed Chair Janet Yellen stated that she expected U.S. inflation to decline further before strengthening, due mainly to crude oil prices and the impact of a strong dollar.
In an appearance at the European Parliament yesterday, ECB President Mario Draghi once again justified adopting an aggressive monetary policy due to fears of seeing eurozone inflation decline further and become a serious threat to the stability of prices in the eurozone. Now that the Greek crisis appears to be contained, he plans to focus all his efforts on rolling out his quantitative easing plan to fight against deflation, which he believes will persist in Europe until the summer.
Year-over-year (YoY) inflation in Canada and the United States, expected to come in at 0.8% and -0.1% respectively, will be announced at 8:30 this morning. If energy and food costs are removed from the calculation, core inflation is expected to be 2.1% in Canada and 1.6% south of the border. A potentially volatile day looms on the horizon.
- Range of the day: 1.2375 - 1.2535
Have a great day!
Salim Laaroussi