The Canadian dollar traded near 1.245, the highest since November 9th, amid higher oil prices and after consumer prices data showed that inflation rose to a 30-year high in December, strengthening the appeal for higher rates from the BoC. Despite the increasing number of Covid-19 cases slowing the economic activity growth, investors are betting that the BoC will raise the rates already in its next monetary policy meeting, with a 70% chance already priced. Canada’s headline inflation rate accelerated to 4.8% in December of 2021 from 4.7% in November and October, matching market expectations. That was the steepest inflation rate since September of 1991, amid ongoing supply disruptions and low base year effects. Also, and more important for the BoC decision, the core measure excluding energy prices rose to 3.8%, accelerating from the 3.3% increase in November.
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Historically, the Canadian Dollar reached an all time high of 1.62 in January of 2002. Canadian Dollar - data, forecasts, historical chart - was last updated on January of 2022.
The Canadian Dollar is expected to trade at 1.26 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 1.28 in 12 months time.