The Canadian dollar has edged higher on Friday, erasing the losses seen on Thursday. Currently, the pair is trading at 1.3415, down 0.20% on the day. On the release front, it’s a busy day on both sides of the border. Canada releases the monthly GDP report, which is expected to post a gain of 0.1% after two straight declines. In the U.S., consumer data will be in focus, with the release of Core PCE Price Index, Personal Spending and UoM Consumer Sentiment.
Investors are keeping a close eye on the ebb and flow of the U.S.-China trade talks, which continues to affect the movement of currency markets. The negotiations between the sides continues and there have been reports of progress. However, optimism waned on Thursday, after a senior U.S. official said that it could be months before a deal is reached. These remarks have raised risk aversion and boosted the dollar.
Global trade tensions have weighed on inflation levels in the developed economies, and the U.S. is no exception. However, with the Fed saying it will put a hold on rates until 2020, could that change? At the Fed policy meeting, policymakers lowered their inflation forecast for 2020, citing weakness in the Chinese and European economies. However, the chief economist of Credit Suisse, James Sweeney, has taken a different tack, saying that U.S. inflation could climb as high as 2.3% next year, in response to the lack of rate hikes. Sweeney said that although inflation remains below the Fed target of 2.0%, there are signs in the services sector of inflation picking up.