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For the past week, the loonie has been in a much need correction as the USD/CAD bounced off the recent lows near the 1.2050 level. Some jawboning from BOC about the strength of the currency along with more hawkish Fed has helped push the pair back to 1.2400 figure, but even yesterday’s uber hawkish FOMC meeting could not push it past that level.

Tomorrow the market will get a look at CAD Retails Sales and CPI numbers. While Retail Sales are expected to slip, inflation is projected to rise. If the CPI numbers meet or beat the forecast USD/CAD could quickly drop towards 1.2200 as expectations of yet another BOC hike will rise markedly.