The breakdown of the report showed transportation costs jumped 1.8% during the month as gasoline prices surged at an annual pace of 14% to mark the fastest pace of growth in eight months, while food prices rose 1.2% after contracting 0.2% in October. However, as prices pressures continue to hold below the Bank of Canada’s 2% target, the central bank is likely to hold a dovish outlook for future policy and maintain its pledge to keep borrowing costs at the record-low throughout the first-half of the following year as the marked appreciation in the exchange rate hampers the prospects for a sustainable recovery.
Meanwhile, the USD/CAD pushed higher for the third-day, with the exchange rate crossing above the 100-Day SMA (1.0688) to reach a fresh monthly high of 1.0747 on the back of U.S. dollar strength however, the overnight rally looks to be losing steam as the hourly RSI falls back from overbought territory. Nevertheless, as this week’s rally remains supported by the 50-Day SMA at 1.0553, a close above the 100-Day favors a bullish outlook for the near-term, giving the rising trend in the 10 and 20 Day moving averages, and the USD/CAD may continue to push higher over the remainder of the month on broad based greenback strength.
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