Canadian consumer prices rose 0.4% in February, with annual inflation slowing to 5.2% from 5.9%. Both figures were below expectations of 0.5% and 5.4%, respectively, reflecting a faster return to normality than economists had expected.
Consumer inflation excluding fuel and food, slowed to 4.7% year-on-year, the lowest since January last year, although the monthly increase was 0.5%.
The slowdown in the annual inflation rate can be explained by a high base effect, as prices rose by 1% per month in the first half of 2012. However, to avoid falling into the trap of an imaginary improvement, it is better to look at the monthly rate of increase.
It remained above the 0.17% needed in February to reach an annual inflation rate of 2%. Thus, inflationary pressures in Canada remain elevated, requiring the regulator to maintain a tight monetary policy stance.
In response to the weaker-than-expected figures, the USDCAD jumped ten pips but quickly pared the gains as high monthly price growth rates do not allow the Bank of Canada to consider its job done.
Earlier this month, the USDCAD peaked at 1.3860 on the back of a rate hike by the Bank of Canada and feared that the Fed would do the opposite. However, since the 10th of March, the pair has been in a steady decline as the divergence in expected policy rates has diminished. It will not be surprising if the Fed turns out to be more accommodative than the Bank of Canada, in line with the historical pattern. The pair's decline promises to continue in that case, with a potential medium-term target near 1.33.
Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD retreats below 1.0700 after upbeat US employment data
EUR/USD has lost its recovery momentum and retreated slightly below 1.0700 in the early American session on Thursday. After the monthly data published by the ADP showed that private sector payrolls rose 278,000 in May, the US Dollar found support and forced the pair to edge lower.
GBP/USD pulls away from daily highs, stays above 1.2450
GBP/USD has edged lower from the daily high it set above 1.2480 but managed to stay above 1.2450. Although the US Dollar stays resilient against its rivals after the better-than-expected private sector employment data, the risk-positive market atmosphere helps the pair hold its ground.
Gold stays in daily range above $1,960 as US yields puch lower
Gold price declined below $1,960 in the early American session but didn't have a hard time rising back above that level. Despite the upbeat ADP employment data from the US, the 10-year US Treasury bond yield stays in the red well below 3.7%, providing a lift to XAU/USD.
Bitcoin likely to remain in red through the next quarter if history is any indication
Bitcoin (BTC) price produced a monthly close at $27,210, noting a -6.92% return for May. The last-minute slide in BTC put an end to the four-month bullish streak that kickstarted the 2023 rally.
C3.ai gets punched in the face, is the AI hype a bit overdone?
OMG! Stocks sold off on Wednesday….and NVDA? That stock gave back $15 or 3.8% - What is going on? That is not supposed to happen….it can only go up! Quick someone call the NVDA police!