The Canadian dollar is unchanged in the Friday session. Currently, USD/CAD is trading at 1.2754, down 0.02% on the day. On the release front, Canada will publish CPI, which is expected to edge lower to 0.1%. In the US, the focus is on housing data, with the release of Building Permits and Housing Starts. Both indicators are expected to post stronger numbers for October, with forecasts of 1.25 million and 1.19 million, respectively.
The Canadian currency continues to have a quiet week, but that could change on Friday, with the release of key inflation indicators, led by CPI. The markets are expecting a negligible gain of 0.1%, as inflation levels remain well below the Bank of Canada target of 2 percent. As for future monetary policy, the BoC plans to proceed with caution, according to Senior Deputy Governor Carolyn Wilkins. On Wednesday, Wilkins said that less stimulus will be needed over time, and she expected wages to rise as the economy improved. Wilkins acknowledged that there was uncertainty over the future of NAFTA, and this was affecting business investment. US President Trump has reiterated that he prefers bilateral trade agreements to multilateral arrangements, and there is a real concern that the US could scuttle NAFTA.
Investors are keeping an eye on Washington, where Republican lawmakers are rushing through major tax reform, with an eye on presenting President Trump with a new bill by Christmas. On Thursday, the House passed its version of the tax bill, by a vote of 227-205. This is a significant victory for President Trump, who is yet to sign into law a major piece of legislation in his term in office. However, with the vote largely based on party lines, Republicans will have a tougher battle passing the Senate version of the bill, as the Republicans have a slim majority of 52-48. The tax legislation provides major tax relief and cut corporate taxes from 35% to 20%, and if Congress does enact a new tax code, it will likely spur strong gains in the US and global stock markets.
