Markets Kick Off the Year on a Positive Note, Bolstered by Encouraging Inflation Data

Although the inflation news is good, market optimism could soon be dashed by downbeat economic data. The worst of the economic impact of interest rate hikes is still to come. With that in mind, we could see the US dollar rebound against other currencies over the next few months. We expect the Canadian dollar to hit a low of around US$0.72 before making a longer-lived rebound later in 2023 and in 2024. We also think the euro’s recovery to US$1.07 was too swift. Expect it to return to near parity with the US dollar in the short term.