Canadian dollar soars to 7-week high as U.S. consumer prices fall
Daily Currency UpdateThe Canadian dollar strengthened to its highest level in nearly seven weeks against its U.S dollar peaking at 1.3350 before giving up its inter-day gains and pair currently trades around 1.3407.
Rising oil prices support the Canadian Dollar and add some pressure amid sustained USD selling. Crude oil prices continue to rise as optimism about China's shift away from its zero-COVID policy strengthens. This change is projected to increase fuel demand, providing support for today's price hike. WTI currently trades around 78.579.
Key MoversThe US Bureau of Labor Statistics announced on Thursday that the Consumer Price Index (CPI) showed inflation in the US fell to 6.5% on a yearly basis in December, down from 7.1% in November. This reading was aligned with what the market predicted. Core CPI, which excludes volatile food and energy prices, rose by 0.3% last month, but came in lower at 5.7% on a yearly basis from 6% as expected.
Thursday also saw the release of the US Initial Jobless Claims. The data published by the US Department of Labor (DOL) showed there were 205,000 initial jobless claims in the week ending January 7. This print followed the previous week's print of 206,000 and surpassed the market expectation of 215,000.
The US Dollar Index remains around the 103.00 area, with inflation data being the major contributor towards the recent dollar weakness
The euro continued to climb in January, peaking at $1.08 against the USD - the highest value it has been since April 2020. Due to increased selling pressure of the US Dollar exacerbated by the release of US inflation figures during December. Preliminary estimates showed that price pressures in Europe were easing more than anticipated, with the yearly inflation rate in the Eurozone dropping to a four-month low.
After the release of US inflation data, the GBP/USD pair reached 1.2244 - the highest level in four weeks and is currently trading around 1.2155.
- EUR/CAD: 1.441 - 1.4493 ▲
- GBP/CAD: 1.6365 - 1.6258 ▼
- AUD/CAD: 0.9256 - 0.9322 ▲
- USD/CAD: 1.3443 - 1.3354 ▼