Home Daily Commentaries Inflation at highest level in almost two decades

Inflation at highest level in almost two decades

Daily Currency Update

CAD - Canadian Dollar

The Canadian dollar strengthened against the US dollar after data showed that Canada’s annual inflation rate rose to 4.1% in August, the highest level in 18 years. Economists were only expecting a 3.9% annual gain. This acceleration was boosted by increased gasoline prices and new home prices, according to Statistics Canada. USDCAD was down 0.35%, trading at 1.2645 at the time of writing.

Key Movers

UK inflation data was posted on Wednesday morning and was the highest reading since March 2012. The year-on-year inflation figure climbed from 2% to 3.2%. This was largely attributed to the 2020 Eat Out to Help Out scheme implemented by the government. The pound climbed 0.22% against the dollar after the data, trading around 1.3836 at the time of writing.

The Australian dollar was the weakest of major currencies through trade on Tuesday, giving up 0.7% amid dovish commentary from RBA Governor Philip Lowe and a broader risk off tone. While maintaining an expectation the economy will rebound swiftly once lockdowns are removed, Lowe pushed back on market expectations for a rate hike in 2022 and H1 2023. AUDUSD was up 0.09% this morning, trading at 0.7324.

Demand for the US dollar fell across the board after inflation data released on Tuesday missed market expectations. The US Dollar Index was down 0.15%, trading around 92.49 at the time of writing.

Expected Ranges

  • EUR/CAD: 1.4931 - 1.5004 ▼
  • GBP/CAD: 1.7486 - 1.7554 ▼
  • AUD/CAD: 0.9255 - 0.9297 ▼
  • USD/CAD: 1.2637 - 1.2707 ▼