Canadian Prices Fall – C$ Follows

Canada’s consumer price index fell by 0.1%, while expectations stood on a rise of the same scale. YoY, prices are rising only 1.3%, weaker than 1.3% that was expected. Core CPI also dropped by 0.1$, falling short of the same expectations of a 0.2% rise. YoY, the rise is only 1.7%, weaker than 2%.

USD/CAD reacts with a rise, but the 0.99 line serves as strong resistance.

The Canadian dollar made nice gains against the US dollar earlier in the week: USD/CAD fell to 0.9859. Support is at 0.9840, as explained in the USDCAD prediction.

The Bank of Canada has been relatively hawkish in recent statements, and is discussing rate hikes and even “full employment” in the future. The fall of core inflation below 2% and the recent weak employment figures weigh on the loonie. On the other hand, the highly regarded Ivey PMI showed a significant improvement, and rose to 58.8 points in a report published earlier in the month.

However, oil prices are definitely supportive of the Canadian dollar.

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