The Canadian dollar today dropped significantly against the US dollar following the release of disappointing Canadian CPI data in the early American session. The loonie’s losses were further compounded by the stronger US dollar, which was boosted by rising US Treasury yields.
The USD/CAD currency pair today rallied from a low of 1.2787 to a high of 1.2909 gaining over 120 points in the early American session.
The loonie was initially stronger than the greenback during the Asian session largely boosted by higher crude oil prices as tracked by the West Texas Intermediate. However, the loonie’s massive decline was triggered by the release of the Canadian CPI data for April by Statistics Canada. The core CPI print increased by 0.1%, while headline CPI grew by 0.3% translating into an annualized 2.2%; both CPI prints missed expectations. The headline Canadian retail sales data for March grew by 0.6% beating expectations, but could not stop the loonie’s decline. The core retail sales contributed to the decline as it contracted by 0.2% instead of the expected 0.5% expansion.
The greenback’s rally as evidenced by the US Dollar Index, which hit a multi-week high of 93.83 today further contributed to the currency pair’s rally. The US dollar is getting stronger by the day boosted by the rally in 10-year US Treasury yields, which hit a high of 3.13% today.
The currency pair’s future performance is likely to be affected by political events in the USA and Canada such as the NAFTA deal given the upcoming weekend.
The USD/CAD currency pair was trading at 1.2898 as at 14:33 GMT having risen from a low of 1.2787 earlier today. The CAD/JPY currency pair was trading at 85.86 having dropped from a high of 86.73.
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