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USD/CAD slips as US rate-hike bets fade ahead of Canada CPI
CME FedWatch shows markets pricing about a 30% chance of a next-meeting Fed rate increase, down from nearly 40% a week earlier.
USD/CAD was around 1.3860 on Monday, down 0.11% on the day, extending a decline as the US dollar stays under pressure versus the Canadian dollar.
Investors have been scaling back expectations for additional Fed monetary tightening after a string of softer US data, including an unexpected decline in retail sales. According to CME FedWatch, markets now price roughly a 30% chance of a rate increase at the next meeting, down from nearly 40% a week earlier.
Attention is shifting to Canada’s July inflation release later Monday. Headline CPI is expected to rise 2.9% year over year, up from 2.8% in June, with prices forecast to increase 0.7% month over month.
On the Bank of Canada side, the policy rate has been held unchanged at 2.25% for the sixth consecutive meeting. At that July meeting, Governor Tiff Macklem said the central bank could look through short-term energy shocks, while emphasizing it would not allow higher energy prices to become persistent inflation.