Loonie Crashes Past a 3-Year Low on Further Weak Inflation
- Canadian Inflation rebounds from a 6-month low, but still weak
- Poloz voices concerns over inflation risks
- USD/CAD rises to a 3-year high
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The Canadian Dollar fell to a 3-year low against its US counterpart, as annual inflation was reported to have rebounded from a 6-month low, but still disappointed expectations, in November.
Consumer prices rose 0.9% from November of 2012, lower than expectations for 1.0% inflation and higher than the 0.7% annual inflation reported in October. Energy prices rose 2.3% annually, leaving inflation at 0.8% when excluding energy prices. Canadian retail sales also disappointed expectations for a 0.2% rise in October by instead declining 0.1%.
The Bank of Canada maintains a policy of to keep inflation between 1% to 3%, and inflation has remained below the bank’s 2% target since May of 2012. Earlier this month, BoC Governor Poloz said the risks of inflation staying below target appear to be greater. The lower inflation may have been one of the reasons the BoC stopped mentioning a rate hike possibility in October.
Therefore, the lower than expected inflation may have driven the Loonie lower against the US Dollar, but a simultaneous better than expected US GDP release was also responsible for the 3-year low. USD/CAD may next see resistance by a February 2010 high at 1.0780.
USD/CAD 1-Minute: December 20, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .
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