Canadian Dollar Gains after March CPI Slows down
THE TAKEAWAY: [Canada’s Consumer Price Index in March Increased 1.0% on a yearly basis] > [Softened inflation is due to declines in gasoline prices] > [USDCAD Bearish]
Canada’s inflation softened in March as gasoline prices dropped. According to a report released by Statistics Canada today, Canada’s Consumer Price Index rose 1.0 percent from a year ago following a 1.2 percent gain in the previous month. The consensus estimate of economists polled by Bloomberg News had called for an increase of 1.1 percent. The core rate, which excluded eight volatile products, remained unchanged at 0.2 percent. On a monthly basis, the inflation rate in March was 0.2 percent following a 1.2 percent rise.
In specific, gasoline prices dropped 0.3 percent from a year ago, which was the key contributor to the CPI. According to a new economic outlook released on Wednesday, the Bank of Canada said that inflation is expected to stay below 2 percent target until second quarter of 2015.
USDCAD 1-minute Chart: April 19, 2013
Chart created using Marketscope 2.0– Prepared by Renee Mu
In the minutes following the data release, the Canadian dollar rallied against the major currencies, with USDCAD falling 10 pips to C$1.0247. As the market gains confidence, the greenback trimmed declines after the report. At the time of this report was written, the USDCAD was trading higher at C$1.02519.
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--- Written by Renee Mu DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.