Canadian Dollar Falls on In-Line Consumer Price Index

Talking Points:

- Canadian Headline CPImatched expectations while Core CPI came in just below.

- Core CPI dragged down by recreation and education prices over the last month..

- USD/CAD spiked lower as USD rose immediately on the news.

October Canadian Headline Consumper Price Index came in at expectations of 1.5%, above the previous read of 1.3%. Month over month, Headline CPI grew 0.2%, as expected. Core Consumer Price Index came in slightly below, at 1.7% versus the 1.8% expected, and 1.8% previously. Month over month, Core CPI grew by 0.2%, below the 0.3% expected.

Much of the drag in CPI came from recreation and education prices, which fall 1.2%. CPI did get a strong boost from gasoline prices, up 3.7%, and energy prices, up 2.0%. This data is just one day after Bank of Canada Deputy Governor Timothy Lane spoke regarding BoC and Federal Reserve policies. He mentioned explicitly that the BoC wll not need to move in lockstep with the Fed and that his monetary goals were primary priority.

See the DailyFX economic calendar for Friday, November 18, 2016

Chart 1: EUR/USD 1-minute Chart (November 18, 2016 Intraday)

In the immediate wake of the data, the Canadian Dollar fell sharply against the US Dollar, with the USD/CAD rising to 1.35311 from 1.35009. After a lot of moving back and forth, the pair ended near 1.35200, by the time this report was written.

--- Written by Omar Habib, DailyFX Research

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