The Canadian dollar fell today as Canada’s consumer prices declined more than was expected. Still, the currency was able to outperform the euro and the Japanese yen.
Canada’s Consumer Price Index fell 0.4 percent in November from the previous month (not seasonally adjusted) while experts predicted just a 0.2 percent decline. The core CPI declined 0.2 percent while forecasters predicted no drop. Retails sales showed no change in October from September. This is compared to the predicted drop by 0.4 percent.
The falling CPI makes it is unlikely for the Bank of Canada to raise interest rates anytime soon. Considering prospects for monetary tightening from the Federal Reserve, the Canadian dollar should continue to underperform compared to its US counterpart. At the same time, exceptionally accommodative policy of the Japanese central bank allowed the loonie to gain on the yen.
USD/CAD rose from 1.1575 to 1.1603 as of 20:34 GMT today after touching the daily high of 1.1632. EUR/CAD dropped from 1.4221 to 1.4185, reversing the rally to daily maximum of 1.4290. CAD/JPY advanced from 102.60 to 103.03.
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