Loonie Profits from Risk Appetite Even as Inflation Slows

The Canadian dollar jumped today as traders were feeling in mood to risk even as problems of Europe remained unresolved and it was unclear if the United States would be able to sustain its economic growth.
Fundamentals have not changed, but for some reason traders changed their mood. Perhaps it was desire to see hope after a long time of hopelessness, perhaps markets were bouncing after a long slide. Whatever the reason, investors showed a desire to buy riskier assets. Crude oil rose 2.4 percent to $80.11 per barrel. The Standard & Poor’s 500 Index advanced 0.7 percent.
Canada’s consumer price inflation rose 1.2 percent in May on an annual basis, following the 2.0 percent increase in April. Core inflation, which excludes most volatile components, advanced 1.8 percent last month from a year ago, compared with the 2.1 percent gain in the previous month. On a monthly basis, the Consumer Price Index declined 0.2 percent.
USD/CAD dropped from 1.0292 to close at 1.0242 and EUR/CAD slipped from 1.2907 to 1.2870. CAD/JPY advanced from 77.94 to the closing price of 78.44.

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