U.S. Inflation figures for December came in at their lowest levels in six years. Although U.S. Federal Reserve board members believe that the impact of lower oil on inflation is temporary, the rising USD is hurting American exports. Coupled with negative global economic growth forecasts, this could convince the Fed to delay hiking its key rate.
There are no North American economic indicators of importance on the schedule today, and U.S. markets are closed for Martin Luther King, Jr. Day. In Canada, our attention this week will be focused on the Bank of Canada’s key rate decision (Wednesday) as no change is expected. Falling crude oil prices should keep the inflation rate low in the next quarters and as a result, our central bank should remain on the sideline for a while with respect to raising its key rate. The BoC’s monetary report and the press conference from Governor Poloz will be closely scrutinized. Caution will be the watchword, with the prevailing volatility of recent weeks set to continue.
