The Canadian dollar has ticked higher in the Thursday session. Currently, USD/CAD is trading at 1.3364, up 0.10% on the day. On the release front, Canada releases a housing report. In the U.S., the key event is unemployment claims, which is expected to drop to 226 thousand. On Friday, the U.S. releases retail sales reports.

U.S. inflation was flat in November, dropping from 0.3 percent a month earlier. This marked the lowest level since May. Core CPI remained pegged at 0.2 percent. The weak readings can be attributed to falling oil prices, which has led to a sharp decline in gasoline prices. On an annualized basis, inflation gained 2.2 percent in November, down from 2.5 percent in October. With the U.S. economy showing signs of slowing down, and the global trade war taking a bite out of the global economy, inflation could continue to head lower as we head into 2019.

The Bank of Canada remains in caution mode, even after strong employment numbers last week. The economy created over 94 thousand jobs, crushing the estimate of 10.1 thousand. As well, the unemployment rate dropped from 5.8 percent to 5.6 percent. However, all is not well with the economy, as GDP declined 0.1% in September, the second decline this year. The bank held interest rates at its policy meeting last week and is expected to do so again in January.

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