USD/CAD trimmed yesterday's gains to trade at 1.3843, the pair's lowest since February 5th, during early European session, still down 0.12%. But the Canadian dollar weakened after a meeting between oil ministers from Saudi Arabia, Russia, Qatar and Venezuela ended with consensus to freeze output, but not to cut production, all eyes on today's Iran's meeting in Tehran.
While, BoC's deputy governor tinted that Canada has a two-speed economy, where the non-resource economy, consumption and exports outperform the energy sector and investment, rendering further easing unnecessary as risks to inflation are roughly balanced. Investment is likely to remain subdued, as oil prices continue declining and volatility in financial markets heightens.
The persistent slack in the economy, coupled with a slowdown in global demand generate deflationary pressures and downside risks to the economic outlook.
We believe more stimulus might be necessary for BoC to keep inflation on track, but BoC will likely wait until the second half of the year, in part until there is more clarity on the fiscal stimulus plan.
This week's data will provide information about the resilience of the non-resource sector and the Canadian consumer.
December manufacturing sales are released on Tuesday (consensus 0.8% m/m), wholesale trade sales on Thursday (consensus -0.3% m/m) and retail sales on Friday (consensus -0.8% m/m).
Price data for January are released on Friday, and the consensus expects headline CPI inflation to reach 1.7% y/y (vs. 1.6% previous) and core to stay at 1.9% y/y.


BOK Expected to Hold Rates at 2.50% as Housing and Currency Pressures Persist
BOJ’s Noguchi Calls for Cautious, Gradual Interest Rate Hikes to Sustain Inflation Goals
BOJ Governor Ueda Highlights Uncertainty Over Future Interest Rate Hikes
Morgan Stanley Boosts Nvidia and Broadcom Targets as AI Demand Surges
Brazil Central Bank Plans $2 Billion Dollar Auctions to Support FX Liquidity
RBA Reassesses Pricing Behaviors and Policy Impact Amid Inflation Pressures
U.S. Productivity Growth Widens Lead Over Other Advanced Economies, Says Goldman Sachs
Singapore Maintains Steady Monetary Outlook as Positive Output Gap Persists into 2025
Fed Officials Split as Powell Weighs December Interest Rate Cut




