Canadian Dollar (CAD) Exchange Rate Soaring After Inflation Rate Rises Unexpectedly
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The ‘Loonie’ has climbed to highs so far of 0.9341, and dipped to lows of 0.9288 this session; with predictably more positive movement to come in light of favourable Canadian data.
The Canadian Dollar has seen a highly influential day on Friday with the release of a mass of upbeat data. The June Canadian Consumer Price Index YoY came in at a higher than forecast 2.4%, bypassing economists’ predictions and May’s figure of 2.3%.
Meanwhile Wholesale Sales reached an impressive 2.2% in May, after economists only forecasted a 0.6% figure; May’s 2.2%, bettered April’s 1.4% statistic.
Inflation has risen over the 2% inflation target for two consecutive months now, following the Governor for the Bank of Canada, Stephen Poloz, stating that any inflation gains will be fleeting.
Forex expert for the Bank of Montreal, Blake Jesperson, commented: ‘Maybe he was wrong on that. [Poloz] seems really confident that inflation is not going to persist at these levels. I guess we will have to see whether he was right or not.’
With such favourable data released for Canada on Friday, the ‘Loonie’ has seen a boost in the currency market against other majors.
However, the Bank of Canada last week decided to maintain 1% interest rates, which have remained stagnant for the past four years.
Economist, Sal Guatieri, stated: ‘The bank has dismissed the recent inflation upturn as largely to transitory increases in items that aren’t related to lessening economic slack. Until it sees a sustained, broad move higher and perkier wage gains, it will remain preoccupied by “serial disappointment” in the global economy and cast a dovish hue on its neutral-policy stance.’
Economist for the Bank of Montreal, Robert Kavcic, stated: ‘Inflation is clearly warming up, but Governor Poloz went to great length to tell us a good part of it is due to transitory factors.’
Other than Retail Sales figures for Canada released on Wednesday next week, Canada will see a quiet week for statistics, lending to other currency market movements to determine fluctuations in the ‘Loonie’.
In light of the recent Malaysian Airlines crash, the ‘Loonie’ initially saw a dip, as investors sought safe haven currencies that pose less risk as commodity prices fluctuated. However the Canadian Dollar may face volatility if any further advancement in geo-political tensions occur.