Canada’s inflation rises to 30-year high
Wednesday 19 January, 2022
Daily Currency UpdateThe Canadian dollar firmed up against the US dollar on Wednesday as red-hot inflation data supported a likely rate hike from the Bank of Canada next week. Consumer prices climbed to its fastest level in 30 years in December, reported Statistics Canada. Annual inflation was 4.8% last month, up from 4.7% in November. However the December number was in line with economist expectations. Inflation has now exceeded the central bank's 1% to 3% control range for nine straight months, adding pressure to policymakers to quickly start raising interest rates.
CAD has also been helped by high oil prices, a reflection of rising tensions in the Middle East as well as supply issues. USDCAD was sitting around 1.25030 at the time of writing.
Key MoversDemand for the US dollar eased on Wednesday though high market expectations for an interest rate hike in March seem to keep the currency well-supported. The US Dollar Index was down 0.18%, trading around 95.57 at the time of writing. US treasury yields, which roughly hit two-year highs on Tuesday, also fell slightly this morning. Federal Reserve policymakers are set to meet next week and will likely provide details on the end of quantitative easing, which will likely be in March. The pound rebounded against the dollar on Wednesday after data showed UK inflation rose 5.4% in December, its highest level in 30 years, further raising rate hike expectations. GBPUSD was up 0.26%, trading at 1.3629 at the time of writing.
- EUR/CAD: 1.4133 - 1.4222 ▲
- GBP/CAD: 1.6984 - 1.7064 ▲
- AUD/CAD: 0.8977 - 0.9043 ▲
- USD/CAD: 1.2456 - 1.2558 ▼