The Canadian dollar today dropped drastically against the US dollar following the release of the latest Canadian Consumer Price Index data, which missed expectations by a huge margin. The loonie’s massive drop drove the USD/CAD currency pair to new 2018 highs as it was further accelerated by the weak Canadian retail sales data also released today.
The USD/CAD currency pair today rallied from a low of 1.3259 to a high of 1.3381 gaining over 120 points in a knee-jerk reaction to the Canadian data.
The currency pair’s rally started when Statistics Canada released the Canadian CPI data for the month of May, which missed expectations. The CPI print came in at an annualized 2.2% as compared to the expected 2.6%, and a monthly 0.1% versus the estimated 0.4%. The rally was further fueled by the release of the final Canadian retail sales data for April, which contracted by 1.2% versus the expected 0.0% flat expansion rate. The core retail sales data also contracted by 0.1% as compared to the expected 0.5% expansion. The combination of weak retails sales and CPI data is what drove the loonie lower.
The release of the weak Markit Flash US Manufacturing PMI data, which came in at 54.6 versus the expected 56.1, had a muted impact on the currency pair. The greenback later headed lower following declining US 10-year bond yields, which drove the US Dollar Index to a low of 94.43 earlier today.
Given the upcoming weekend, the currency pair’s future performance is likely to be affected by geopolitical events affecting the USA and Canada.
The USD/CAD currency pair was trading at 1.3335 as at 15:08 GMT having rallied from an initial low of 1.3259. The CAD/JPY currency pair was trading at 82.43 having dropped from a high of 83.04.
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