While the ‘Loonie’ was able to rally to a two-week high against the US Dollar overnight as the odds of the Fed tapering stimulus fell and investors turned from the ‘Greenback’, the commodity-driven asset fluctuated today in response to domestic inflation figures.
The Canadian Dollar also extended declines against the Pound during European trading.
The Canadian Dollar Exchange Rate was in the region of 0.6007 against the British Pound as of 14:40 GMT
The inflation report showed that consumer prices increased at a 1.1 per cent annual pace in September, more than the 1.0 per cent forecast but still at the lower end of the 1 to 3 per cent target set by the Bank of Canada.
Month-on-month, consumer prices advanced by 0.2 per cent rather than the 0.1 per cent estimated.
The result prompted modest Canadian Dollar movement in a quiet trading day.
According to fixed-income strategist Mark Chandler; ‘The economic landscape in the US and Canada is fraught with uncertainty, and the same concerns about growth in the US have tainted the Canadian outlook. Inflation data continues to come in on the soft side, which gives the Bank of Canada cover to be more dovish.’
The CAD/GBP exchange rate hit a low of 0.5984
Similarly, macro strategist Mazen Issa stated; ‘It re-enforces that the bank is going to have a lot of breathing room on the inflation front to remain sidelined.’
Core inflation was unchanged from Augusts’ 1.3 per cent.
While the assumption that the 16-day government shutdown in the US will deter the Federal Reserve from tapering stimulus is supporting the CAD/USD pairing, hopes that the UK economy will continue to show improvement is keeping CAD/GBP under pressure.
However, there was some bright news for Canada today as the nation reached a free-trade deal with the EU after four years of negotiations.
Following a meeting in Brussels today, Canadian Prime Minister Stephen Harper and European Commission President Jose Barroso announced an ‘agreement in principle’.
Although the accord still needs to be approved by the European Parliament and EU national governments, it could mean banishing 98 per cent of all EU and Canadian tariff lines.
The main Canadian data to look out for next week is the nation’s retail sales figures, due for release on the 22nd. If month-on-month sales increase by more than the 0.6 per cent achieved in August the ‘Loonie’ could be lifted.
The Bank of Canada’s rate decision on the 23rd will also be of particular interest.
Current Canadian Dollar (CAD) Exchange Rates:
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The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9720 –
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7108 <
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6007 <
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0058 <
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.1416 <
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.6658 >
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0295 >
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.4085 >
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8748 >
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.9938 >
(Correct as of 14:40 GMT)
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