Cad Recovery Against Us Dollar Unlikely

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Cad Recovery Against Us Dollar Unlikely

Commerzbank - CAD Recovery Against US Dollar Highly Unlikely

According to Commerzbank economists, the Canadian Dollar has very little chance of staging a good recovery against the US Dollar. These comments were made as the investors await the Canadian inflation data to understand the price pressure in the country.

The core of the message made by the Commerzbank is that the CAD is highly likely to lose against the US Dollar. Looking ahead, we have the September inflation data of Canada, which will provide much-needed clarity on the BoC's next action.

No Improvement In Canadian Inflation

According to a survey of analysts, the inflation situation in Canada will not improve at all. So, if we take this into account, it means the rumors of high-interest rates will only increase after the inflation data. At the same time, the BoC is also likely to stay hawkish about any future rate hikes to control the high core inflation.

In general, that's one factor that's bullish for the Canadian Dollar (CAD), but it will not be much given the macroeconomic condition of the USA and Canada. At the end of the day, the data coming out of the US is proving to be more robust than the of Canada, which means the USD will win against the CAD in the short and medium term.

Furthermore, the Canadian Dollar is highly linked to commodities, and since the oil prices have dropped as of late, it means a negative CAD against the USD. Even though the central banks around the world have been trying to control inflation for years now, it still remains the most important matter.

That's why it seems that even the year 2024 will center around inflation and how the central banks, like the BoC, try to control it with high inflation. One particular fact that can be concluded from the past few years is that interest rate rates aren't proving to be much effective in controlling the inflation at all.

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