TheÂ Canadian dollar today dropped drastically against theÂ US dollar following theÂ release ofÂ theÂ latest Canadian Consumer Price Index data, which missed expectations byÂ aÂ huge margin. TheÂ loonie’s massive drop drove theÂ USD/CAD currency pair toÂ new 2018 highs asÂ it was further accelerated byÂ theÂ weak Canadian retail sales data also released today.
TheÂ USD/CAD currency pair today rallied from aÂ low ofÂ 1.3259 toÂ aÂ high ofÂ 1.3381 gaining over 120 points inÂ aÂ knee-jerk reaction toÂ theÂ Canadian data.
TheÂ currency pair’s rally started when Statistics Canada released theÂ Canadian CPI data forÂ theÂ month ofÂ May, which missed expectations. TheÂ CPI print came inÂ atÂ anÂ annualized 2.2% asÂ compared toÂ theÂ expected 2.6%, andÂ aÂ monthly 0.1% versus theÂ estimated 0.4%. TheÂ rally was further fueled byÂ theÂ release ofÂ theÂ final Canadian retail sales data forÂ April, which contracted byÂ 1.2% versus theÂ expected 0.0% flat expansion rate. TheÂ core retail sales data also contracted byÂ 0.1% asÂ compared toÂ theÂ expected 0.5% expansion. TheÂ combination ofÂ weak retails sales andÂ CPI data is what drove theÂ loonie lower.
TheÂ release ofÂ theÂ weak Markit Flash US Manufacturing PMI data, which came inÂ atÂ 54.6 versus theÂ expected 56.1, had aÂ muted impact onÂ theÂ currency pair. TheÂ greenback later headed lower following declining US 10-year bond yields, which drove theÂ US Dollar Index toÂ aÂ low ofÂ 94.43 earlier today.
Given theÂ upcoming weekend, theÂ currency pair’s future performance is likely toÂ be affected byÂ geopolitical events affecting theÂ USA andÂ Canada.
TheÂ USD/CAD currency pair was trading atÂ 1.3335 asÂ atÂ 15:08 GMT having rallied from anÂ initial low ofÂ 1.3259. TheÂ CAD/JPY currency pair was trading atÂ 82.43 having dropped from aÂ high ofÂ 83.04.
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