Analysts at CIBC see the USD/CAD rally not posting dangers to the inflation outlook in Canada. They count on that the Loonie to rise throughout 2019.
“The C$ dropped by round three.5% on a commerce weighted foundation within the closing quarter of 2018, with a lot of that coming towards the US$. Nevertheless, whereas the weaker loonie will end in increased inflation for a lot of imports, the direct influence on CPI is unlikely to be sufficiently big to sway the Financial institution of Canada into motion with out an accompanying acceleration in progress.”
“Whereas BoC analysis confirmed than the direct import content material in CPI has risen steadily, that was primarily due to China and to a lesser extent European imports. The contribution coming from the US has remained comparatively regular.”
“Whereas we count on the C$ to common barely stronger than present ranges in 2019, that might be pushed primarily by a rebound in oil worth and progress prospects reasonably than a giant inflation pick-up.”