The Canadian dollar is trading sideways in the Wednesday session. Currently, USD/CAD is trading at 1.2957, up 0.04% on the day. On the release front, there are no Canadian events. In the U.S, the focus is on the Federal Reserve, which is virtually certain to raise the benchmark rate to a range between 2.00% and 2.25%. On Thursday, the U.S will publish Final GDP and durable goods orders.
On Friday, CPI dipped from 3.0% to 2.8% in August, posting a rare decline. Still, inflation remains well above the BoC target of 2.0%. The markets are leaning heavily towards a rate hike in October, which would raise the benchmark rate to 1.75%. BoC Governor Stephen Poloz will deliver a speech and hold a press conference, and investors will be looking for hints regarding monetary policy. With the U.S poised to raise rates on Wednesday and another rate hike likely in December, the BoC will be under pressure to follow the Fed’s lead and raise rates at least one more time this year.
All eyes are on the Federal Reserve, which is widely expected to raise rates by 25 basis points at the conclusion of its policy meeting on Wednesday. What will be the tone of the rate statement? The U.S economy is in excellent shape, with GDP for Q2 expected at 4.2%, and unemployment hovering below 4 percent. However, the escalating global trade war has raised concerns that it could cool down global economic growth and hurt the U.S economy as well. Still, another rate hike in December is pegged at 78% according to the CME, and some experts are predicting up to four rate hikes in 2019.
