Inflation figures for the European and Canadian economies will be released on Tuesday, which is likely to have a significant impact on trading.
EURCAD: Daily Chart
The EURCAD exchange rate consolidated last week after the European Central Bank’s surprise rate hike. The pair is now trading at 1.4415.
The Canadian dollar’s appreciation last week was also attributable to higher oil prices. The price of oil surged above $90 per barrel as traders continued to price in the latest production cuts from Saudi Arabia and Russia.
The two major energy producers had initially planned to cut production until the end of September, but have extended that deadline to the end of the year. Additionally, there are other factors that are driving crude oil prices higher, despite a weakened global economy.
Tomorrow will see the release of the final reading for core inflation in the European economy, but it is not expected to deviate significantly from the 5.3% reading that is anticipated. The European Central Bank surprised traders last week with another 25-basis point interest rate hike.
The European Central Bank (ECB) increased interest rates by 0.25 percentage points to 4 percent on Thursday, signalling that it had completed its protracted campaign of rate hikes to control persistent inflation.
The European Central Bank has now increased its benchmark interest rate at ten consecutive meetings, taking it to its highest level since the euro was introduced in 1999.
The European Central Bank (ECB) has stated that current interest rates are at a level that, if maintained for a sufficiently long period of time, will make a significant contribution to the timely return of inflation to the target. ECB President Christine Lagarde defended the decision on Thursday, saying: “I believe it will reinforce progress towards the target; we are determined to reach that 2%.”
The European Central Bank (ECB) expects inflation to “remain too high and for too long,” said President Christine Lagarde. However, she added that inflation has declined, and the ECB wants it to continue to decline and reinforce that process.
Attention will turn to inflation again tomorrow, this time in Canada, with the release of core inflation and the country’s main inflation rate. Core inflation is expected to be 3.2% year-on-year, while the headline rate is expected to be 3.8%. Analysts have suggested that the Bank of Canada may have finished raising interest rates for the time being.