Skip to content CAD Strengthens Past $1.4 Amidst Inflation Data
The Canadian dollar has recently strengthened, moving past 1.4 per U.S. dollar. This marks a recovery from its lowest point since May 2020, which was 1.41 per USD on November 15th. The main reason for this improvement is that high inflation data has reduced the chances of significant rate cuts by the Bank of Canada.
In October, the trimmed mean core inflation rate—which the Bank of Canada prefers to measure underlying inflation—rose to 2.6%. This was up from a three-year low of 2.4% in September and higher than experts had expected.
Moreover, the economy showed resilience with lower-than-expected unemployment rates and strong Purchasing Managers’ Index (PMI) readings. These positive signs further lessened the likelihood of major rate cuts.
However, the gains of the Canadian dollar were limited. The U.S. dollar remained strong because investors expect the U.S. Federal Reserve to be less aggressive in cutting rates. There are also concerns about U.S. import sanctions that could affect Canadian exports.
Additionally, investors are seeking safe assets due to the escalating war in Ukraine.
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