The Canadian dollar has been one of the beneficiaries of the dovish Fed. Not only did they leave rates unchanged, but the team led by Yellen also lowered forecasts, including for those rates, even if she still talked about a 2015 move.
As a “risk currency”, the loonie enjoyed the move, falling from around 1.3180 to as low as 1.3012, but now things have changed.
Canada reported its inflation figures: core inflation dropped from 2.4% y/y to 2.1% y/y, but this was exactly as expected, and so was the month over month number: 0.2% as expected. Headline CPI remained unchanged on the month and +1.3% y/y, both as predicted.
So what sent USD/CAD up from 1.3070? It seems that some stops were triggered at the lower levels, close to the round number. In addition, looking at other currencies, it seems that the C$ is just sliding with the rest: the US dollar is enjoying some kind of resurgence.
The big question remains the Fed: is it a temporary delay for the inevitable rate hike or will the Fed continue postponing the rate hike?
In any case, here is the chart:
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