The Canadian dollar traded slightly lower but remained range-bound in dull trade against its US counterpart on Thursday amid fears the Federal Reserve will become more hawkish on inflation next week, thus boosting the US Dollar.
In yesterday’s meeting, the Bank of Canada shocked markets by announcing the end of quantitative easing and revised its outlook for overnight rates, signaling that slack will be fully realized by the middle of next year rather than previous expectations of the second half of next year.
Investors are already looking past the months-long process of scaling back the Fed’s $120 billion in monthly bond purchases, which is expected to be announced next week in its November meeting. They are more worried with when interest rates will be raised by the central bank and shift their expectations for the first hike because of high inflation readings.
Looking forward, today the Canadian GDP will be released with also from the US the Core PCE Price Index, Chicago PMI, and the Revised UoM Consumer Sentiment.
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