The models are broken
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
FX Trader, Loonieviews.net
Summary: A sharper-than-expected downtown in Canadian Retail Sales hit the loonie where it hurts today, sending USDCAD to the 1.3019 area.
Shoppers weren’t shopping, and inflation wasn’t inflating. That sums up this morning Canadian Retail Sales and CPI reports and explains the surge in USDCAD from 1.3015 to 1.3019. The data was expected to be slightly weaker than last month’s results, but today’s numbers were well beyond the most pessimistic forecasts; August Retail Sales fell 0.1% (forecast 0.3%) and September CPI fell 0.4%. (forecast 0.0%)
Nevertheless, Canada’s 2.2% annual rate of inflation is still above the Bank of Canada target, and the BoC will still raise interest rates by 0.25% next Thursday.