Loonie Falls After Canada Inflation Drops Unexpectedly
June 23 2017 - 5:22AM
RTTF2
The Canadian dollar slipped against its major opponents in the
European session on Friday, as nation's consumer price inflation
unexpectedly fell in May, dampening expectations for the Bank of
Canada rate hike in near future.
Data from Statistics Canada showed that CPI fell 0.2 percent on
a seasonally adjusted monthly basis in May, after increasing 0.4
percent in April. Economists were looking for a 0.2 percent
gain.
Excluding food and energy, inflation ticked up 0.1 percent
month-over-month. This was unchanged from April's figure.
Oil prices rose on optimism over higher compliance by oil
producing nations to stick to output cut deal, with overall
conformity levels exceeding 100% in both April and May to reach its
highest level since January 2017.
The Joint OPEC-Non-OPEC Ministerial Monitoring Committee noted
that OPEC and participating non-OPEC producing countries recorded
the highest conformity ever with their voluntary adjustments in
production, achieving a level of 106 percent in May.
The loonie showed mixed performance in the Asian session. While
the loonie held steady against the euro and the yen, it rose
against the aussie and the greenback.
The loonie dropped to 83.65 against the Japanese yen, after
having advanced to 84.24 at 9:00 pm ET. Continuation of the
loonie's downtrend may see it challenging support around the 82.00
region.
The latest survey from Nikkei showed that Japan's manufacturing
sector continued to expand in May, albeit at a slower pace, with a
seven-month low manufacturing PMI score of 52.0.
That's down from 53.1 in May, although it remains above the
boom-or-bust line of 50 that separates expansion from
contraction.
The loonie edged down to 1.3297 against the greenback, off its
early high of 1.3211. If the loonie extends weakness, it may target
1.34 as the next support level.
Reversing from an early high of 0.9966 against the aussie, the
loonie weakened to 1.0064. The next possible support for the loonie
is seen around the 1.015 mark.
Having advanced to 1.4740 against the euro at 8:15 pm ET, the
loonie fell to 1.4863. The loonie is poised to target support
around the 1.50 area.
Flash survey data from IHS Markit showed that the euro area
private sector grew at the slowest pace in five months in June.
The composite output index fell to 55.7 in June from a joint
six-year high of 56.8 in May. The score was forecast to drop
moderately to 56.6.
Looking ahead, U.S. new home sales for May are due shortly.
At 2:15 pm ET, Federal Reserve Governor Jerome Powell gives a
speech titled "Central Clearing and Liquidity" at the Federal
Reserve Bank of Chicago Symposium on Central Clearing.
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