Connect with us

Economics

Canadian Dollar Strengthens Despite Higher-Than-Expected Inflation

The Canadian dollar is strengthening against its US currency peer on Wednesday, despite price inflation coming in higher than the market forecast. Although the loonie has fallen against the greenback this year, the Canadian dollar has been making gains in recent months, allowing the currency to stabilize after enormous volatility in the first half of 2020. According to Statistics Canada, the consumer price index (CPI) rose 0.4% in October, up from […]

Share this article:

Published

on

This article was originally published by Forex News

The Canadian dollar is strengthening against its US currency peer on Wednesday, despite price inflation coming in higher than the market forecast. Although the loonie has fallen against the greenback this year, the Canadian dollar has been making gains in recent months, allowing the currency to stabilize after enormous volatility in the first half of 2020.

According to Statistics Canada, the consumer price index (CPI) rose 0.4% in October, up from the 0.1% drop in September. The annual inflation rate climbed to 0.7% in October, up from 0.5% in the previous month. The market had penciled in a reading of 0.4%, but it is still lower than the 2020 high of 2.2% in February. The core inflation rate, which excludes volatile food and energy, advanced at a higher-than-expected year-over-year pace of 1%.

In October, the Canadian economy reported higher prices for food (2.3%), shelter (1.8%), and health care (1.8%). They were offset slightly by declines in apparel (-4%), transportation (-0.1%), and recreation and education (-1.3%).

In other data, housing starts surged from 208,700 in September to 214,900 in October. Wholesale sales rose 0.9% in September, up from 0.3% in August. Manufacturing sales popped 1.5% in September, up from the 1.4% decline in August. New motor vehicle sales increased by 3% in September.

In the financial markets, foreign securities purchases rose $4.5 billion in September, while foreign securities purchases by Canadians spiked $11.2 billion.

The loonie is finding support from rising energy prices. December West Texas Intermediate (WTI) crude oil futures rallied $0.71, or 1.71%, to $42.14 per barrel. January natural gas futures tacked on $0.046, or 1.65%, to $2.891 per million British thermal units (btu).

Since Canada maintains a current account deficit, exports remain critical to the national economy. Oil and gas products are the country’s top exports, so any significant change in prices – high or low – can have an impact on both the broader economy and the loonie.

The bond market was mixed in the middle of the trading week. The benchmark ten-year bond dropped 0.023% to 0.715. The one-year note was unchanged at 0.2%, while the 30-year bond slid by 0.044% to 1.255%.

The USD/CAD currency pair tumbled 0.4% to 1.3052, from an opening of 1.3107, at 16:04 GMT on Wednesday. The EUR/CAD slipped by 0.34% to 1.5490, from an opening of 1.5544.


© AndrewMoran for Forex News, 2020. |
Permalink |
No comment |
Add to
del.icio.us

Post tags: , , , , , , , , , , , ,

Feed enhanced by Better Feed from Ozh

inflation

Share this article:

Economics

Mapped: 2023 Inflation Forecasts by Country

Inflation surged on a global scale in 2022, hitting record-level highs in many countries. Could it finally subside in 2023?
The post Mapped: 2023 Inflation…

Share this article:

Continue Reading
Economics

Mooners and Shakers: Bitcoin pulls back a bit (AI tokens a lot); High-volume Aussie traders have been buying, says Swyftx

Bitcoin, and the crypto market on the whole, have retraced somewhat overnight. In fact, AI tokens have taken quite a … Read More
The post Mooners and…

Share this article:

Continue Reading
Economics

Erik Schön: The Art Of Strategy

What is strategy, and is it useful for business? Business schools want you think it is the critical factor in competitive success or failure. They teach…

Share this article:

Continue Reading

Trending