Today is Fri, October 20, 2017 17:46:11 GMT
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Currencies CAD Loonie (CAD) Rallies On Higher CPI Data!

The Canadian dollar (Loonie) is higher this morning as CPI data came in hotter than expected with Core inflation coming in at 2.1% vs. an expected 1.9% and the Headline figure at 2.9% vs. 2.8% expectation.  While these figures are lower than last month, it should be noted that markets are foward-looking and the idea that prices would come down further means that there may be some room for further strength.

That’s not to say that we think the Bank of Canada will be raising interest rates any time soon, but rather they will be on high alert for higher inflation that may harm the economy. 

Another important “feature” of the Loonie is that it has a high correlation with the price of oil so with oil just below $100/barrel, it makes sense that the Loonie would strengthen.  From the chart below, you can see that 1.03 acted as rock-solid resistance, with the next move expected to go back to parity vs. USD.