Canadian Dollar Falls As Inflation Data Disappoints

The Japanese Yen fell to the lowest level since January against the dollar. The decline was associated with the inflation report from Japan that missed analysts’ forecasts. The statistics bureau data showed that the inflation rose by an annual rate of 0.6%, which was lower than the expected 0.7%. During the month, the inflation remained stable at negative 0.4%. The report came two days after the country reported disappointing quarterly GDP numbers, ending the longest quarterly gain in 28 years. It also came as North Korea threatened to pull out of the meeting with the United States in Singapore. The USD/JPY pair is now trading at 110.9.

Earlier today, there was optimism on trade after the Wall Street Journal ran a story saying that China had agreed to reduce the trade deficit with the US by $200 billion. The report suggested that China would increase its US purchases in agriculture, semiconductors, and energy. An analysis by Bloomberg’s David Fickling found that this promise was far-stretched because it would mean US would almost double its exports to China. Later in the day, China denied offering the offer. Meanwhile, the dollar index continued going up caused mostly by the weakness in the peer currencies. The euro, pound, and yen dropped by more than 20 basis points each against the dollar.

The Canadian dollar fell after data from Statistics Canada showed that consumer prices rose lower than expected in April. The CPI rose by an annual rate of 2.2% which was lower than the expected 2.3%. During the month, the consumer prices rose by 0.3%, which was lower than the expected 0.4%. The core CPI, which excludes volatile energy and food products rose by 0.1%, lower than last month’s 0.2%. On an annual basis, the core CPI rose by 1.5% beating analysts’ forecasts.

USD/JPY

The USD/JPY advanced to the highest level since January. The pair is now trading at 110.9, which is an important resistance level as shown below. The 50-day SMA is currently trading on the left side of the shorter-term 30-day SMA while the RSI is above 70. Further movements above this resistance could see the pair try to test the next important resistance of 114.

EUR/USD

On Wednesday, the EUR/USD pair reached the 1.1760 level, ending a steep decline that started on Monday. Yesterday, the pair attempted to reverse the losses but failed when it touched the 1.1837 level. It is now trading below the 50 and 30-day moving averages. Today, the pair has fallen from yesterday’s highs and it seems to be headed to the 1.1760 level. If it reaches this level, it could be a double bottom for the pair.

USD/CAD

The Canadian dollar fell to the lowest level since Wednesday after the weak inflation data. The pair is now trading at 1.2874 which is higher than the 100-day moving average. It is also above an important support level as shown below. By breaching this support, there is a likelihood that the pair could move to test the 1.2924 level which is the highest level since Tuesday.