Inflation numbers beat expectations
Wednesday 17 February, 2021
Daily Currency UpdateCAD - Canadian DollarCanadian consumer prices increased at a pace greater than what economists had projected for the month of January.This morning, Statistics Canada said that the Consumer Price Index (CPI) rose at a faster pace in January (+1.0%) year over year than in December (+0.7%). The acceleration in consumer prices was largely due to higher prices for durable goods (+1.7%) and rising gasoline prices (+6.1%) compared with December 2020. Excluding gasoline, the CPI grew 1.3% in January—up from a 1.0% increase in December. Economists expected the CPI to come in at 0.5%.This morning, demand for US dollars has edged USDCAD up higher for a second day as it approached 1.274.
Key MoversURUSD has struggled to take a direction at the start of this week. It appears to be a case of two struggling currencies meeting each other head on. The dollar has struggled since the second quarter of 2020, as the Federal Reserve cut the US interest rates to record lows after COVID-19 derailed the economy. The euro’s performance has been dampened recently due their lack of progress on a vaccination plan and numerous supply chain issues.GBPUSD dipped briefly below the $1.39 handle yesterday afternoon. However, the Great British pound made a steady recovery and was trading back above the $1.39 handle by the end of the day. The pair tested highs last seen in April 2018.The Australian dollar struggled to extend beyond recent ranges, drifting lower overnight having failed to consolidate moves beyond 0.78 US cents. While treasury yields and equities continue to run higher, currency markets offered little to excite investors as the correlation across asset classes weakens.
- EUR/CAD: 1.529 - 1.537 ▲
- GBP/CAD: 1.760 - 1.766 ▲
- AUD/CAD: 0.982 - 0.986 ▲
- USD/CAD: 1.268 - 1.274 ▼