Loonie Erases Losses as Inflation Accelerates

The Canadian dollar was falling today, but managed to pare losses before the end of the trading session as Canada’s inflation accelerated even though it was still below forecasts and the central bank’s target.
Statistics Canada reported that the Consumer Prices Index rose 1.3 percent in July, up 0.1 percentage point from June, but still trailing the forecast of 1.4 percent. Core inflation accelerated to 1.4 percent, also 0.1 percent above the preceding month’s increase, but below the expectations of 1.5 percent. The Bank of Canada target 2 percent inflation.
The general market sentiment was mostly adverse to commodity related currencies (though not to all of them). Yet crude oil, the main Canada’s export, climbed, lending support for Canada’s currency.
USD/CAD closed at 1.0500 today after climbing from 1.0512 to 1.0567. EUR/CAD jumped from 1.4042 to 1.4125 (the highest price since October 2011), but retreated to close at 1.4054. CAD/JPY was up from 93.82 to 93.93 after falling to 93.52 earlier.

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