CAD will continue to struggle with a recovery against USD and EUR – Commerzbank

Growth in the Canadian economy ground to a halt in Q4. Following the publication of the data the Loonie eased. The losses were limited though. Still, economists at Commerzbank expect the CAD to struggle against USD and EUR.

Canadian GDP data confirms rate pause

“The Canadian GDP data for Q4 came in much lower than expected. It illustrated that the economy stagnated compared with the previous quarter. Moreover, the result for the previous quarter was revised to the downside.”

“The data is likely to confirm the BoC in its course. At the January meeting it had signalled that it wants to wait and see what the effects of the massive rate hikes last year will be on the economy and had announced a rate pause for the meeting next week.”

“The economic momentum is likely to suit the BoC and confirm it in its view that the stubbornly high core inflation levels will also return towards its target rate soon. It will be important for the Loonie now whether the Canadian data will confirm this picture.” 

“CAD will continue to struggle with a recovery against USD and EUR, as core rate concerns are keeping rate expectations high there.”