The Canadian dollar is almost unchanged in the Friday session. Currently, USD/CAD is trading at 1.3175, down 0.01% on the day. On the release front, Canada releases Manufacturing Sales, which is expected to rebound with a gain of 0.1%, after a decline of -0.4% in the previous release. There are no major U.S indicators on the schedule.
Consumer inflation and spending numbers were strong in October, as the U.S. economy remains strong. On Thursday, the U.S released retail sales reports. Retail sales rebounded with a strong gain of 0.7% in October, after a decline of -0.1% a month earlier. Core retail sales jumped 0.8%, after a gain of 0.1% in September. There was good news from the inflation front on Wednesday, as U.S consumer inflation numbers beat their estimates for October. The consumer price index posted a gain of 0.3%, its strongest gain since January. Core CPI, which excludes food and energy prices edged higher to 0.2%, marking a 3-month high. Both releases were in line with forecasts. Core CPI was 2.1% higher than a year ago. The solid consumer data means that the Fed remains on track to continue raising interest rates. The Federal Reserve holds its next policy meeting in December, with the odds of a December rate hike at 72%, according to the CME Group.
The Bank of Canada released a semi-annual survey on Wednesday, and the results indicated that risk management professionals were more concerned about the global economic picture. The escalating tariff war between the U.S. and its trading partners could take a bite out of the Canadian export sector, although the new USMCA pact, which replaces NAFTA, is a huge relief to the business sector. The BoC has raised interest rates five times in the past 16 months, keeping pace with the Federal Reserve. However, with the Fed likely to raise rates in December and continue raising rates gradually in 2019, the BoC will have to answer in kind or the Canadian dollar could lose ground.
