Canadian Dollar (CAD) Exchange Rate Pares Decline after On-Target CPI
The Canadian Dollar recovered ground against Sterling and the US Dollar today after the publication of domestic inflation data.
Yesterday the ‘Loonie’ fluctuated following the release of retail sales figures for Canada.
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The report revealed a 0.1 per cent monthly decline in retail sales including autos in April and a 0.1 per cent gain in sales excluding autos.
Economists had forecast a 0.3 per cent month-on-month gain sales including autos.
While the Canadian Dollar did post a modest advance against the Pound on Thursday (as investors had a negative reaction to the UK’s 0.8 per cent quarterly growth) the commodity-driven currency slipped against the US Dollar following the release of a positive US manufacturing PMI.
Today’s CPI data showed that prices climbed by 0.3 per cent in April, month-on-month, as forecast.
On the year prices were up by 2 per cent. This followed a pace of 1.5 per cent in March, with the increase being largely the result of a 8.4 per cent surge in energy prices.
The Bank of Canada’s core consumer price index produced a month-on-month reading of 0.2 per cent and a year-on-year reading of 1.4 per cent.
According to forex expert Jack Spitz; ‘Headline print at 2 per cent is not at all surprising – the market was expecting it, and the numbers by and large were bang on the screws. It changes nothing at the Bank of Canada, and from a currency perspective it’s not likely to push Dollar/Canada out of its fairly narrow range.’
Movement in the CAD/GBP pairing was also limited on Friday due to a lack of influential economic data for the UK.
Next week the Canadian reports to be aware of are the nation’s current account and average weekly earnings figures (due out on Thursday) and Friday’s domestic growth and industrial production data.
In the fourth quarter of 2013 Canada posted annualised growth of 2.9 per cent. Investors will be hoping for a better result from the first quarter of 2014.
The commodity-driven Canadian Dollar will also be affected by data from China, including the nation’s leading index and industrial profits figures.
US growth data will also be of particular interest as the US is Canada’s main trading partner. Some investors believe that the lacklustre 0.1 per cent annualised growth recorded by the US in the first quarter could be negatively revised.
The Canadian Dollar is trading against the British Pound in the region of 0.5458 and against the US Dollar in the region of 0.9182.