Talking Points:

  • Canadian inflation retouches a 23-month high in March
  • BoC warns that inflation rise is transitory
  • Canadian Dollar rallies 25 pips against the US Dollar

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Canada CPI





Canada CPI





The Canadian Dollar rallied in Forex markets, as consumer prices were reported to have risen more than expected in March. The annual inflation rate retouched the 23-month high at 1.5%.

The Loonie rally on the improved inflation data may have surprised Forex traders after the Bank of Canada said yesterday that higher inflation this year is only transitory and the 2% inflation target is unlikely to be met until 2016. The BoC left its target interest rate at 1% yesterday and maintained a neutral tone on the rate change. However, continually higher inflation may prompt the BoC to tighten policy sooner than expected.

USD/CAD 1-Minute: April 17, 2014

Canadian-Dollar-Rallies-on-Improved-Inflation-Despite-BoC-Warning_body_Picture_1.png, Canadian Dollar Rallies on Improved Inflation Despite BoC Warning

USD/CAD fell 25 pips to a daily low at 1.0983 following the release of the inflation data, but support may continue to be provided by the key 1.1000 level. Currency Strategist Ilya Spivak says a USD/CAD close above resistance at 1.1017 may expose another 100 pips of upside momentum.

Chart created by Baruch Spier using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.

-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to .