The Loonie was the big loser yesterday when the USD/CAD moved 0.7 percent higher at one point, touching 18-month new highs after weaker oil prices, which fell 7.4 percent in yesterday’s session. The perception of oil damaging the Canadian economy is essential and it might be dragging down economic growth and inflation.
On the release side, the consumer price index month to month (November) came in at 0.4 percent as expected; however, the annual number came in at 1.7 percent lower than the survey at 1.8 percent.
The Loonie was having a relief rally in the Asian and European session, touching an intraday low of 1.3434 along with quiet price action in the crude; however, this lower than expected CPI pushed the USD/CAD pair higher by around 22 pips, at this moment it is trading at 1.3464.
Over the next few hours, we expect the Loonie to continue trading at the mercy of crude prices and pick up a more precise direction after the Fed announcement in the US at 2:00 pm Est. later today.