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COZfx: USD/CAD drops after Canadian inflation data

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COZfx: USD/CAD drops after Canadian inflation data

Postby dwang » Fri Apr 18, 2014 1:56 am

COZforex: The US dollar slid to session lows against the Canadian dollar on Thursday, after data showed that the annual rate of Canadian inflation rose to the highest since June 2012 in March.

USD/CAD touched lows of 1.0991 and was last down 0.15% to 1.0995. COZFX strategist Nigel Boynton said, USD/CAD is predicted to find support at 1.0964, and a drop through could take it to the next support line of 1.0922. Meanwhile, the pair is predicted to find its first resistance at 1.1041, and a rise through could take it to the next resistance line of 1.1076.

The loonie, as the Canadian dollar is also known, was boosted after Statistics Canada reported that the annual rate of consumer inflation rise to 1.5% last month from 1.1% in February, led higher by a jump in energy costs and cigarettes. This was slightly ahead of expectations for an increase to 1.4%.

On a month-to-month basis, Canadian consumer prices climbed 0.6%, compared to expectations for a 0.4% rise, mostly due to higher gasoline prices. Core inflation, which strips out more volatile items like energy costs, rise 1.3% from a year earlier and was up 0.3% on the month, in line with forecasts.

The Bank of Canada kept its benchmark interest rate unchanged at 1.0% for the 29th straight policy meeting and after the BoC Governor, Stephen Poloz maintained his “neutral” stance on the direction of the interest rate, by indicating that “rate cuts cannot be taken off the table at this stage.” Negative sentiment was also fuelled after the BoC, in its Monetary Policy Report, slashed its projections on the growth of the Canadian economy to 2.3% this year, from its January forecast of 2.5%, amid concerns on reduced contribution by business investment. However, the central bank maintained its 2015 growth estimate at 2.5% and further issued the first estimate of 2016 growth at 2.2%.

The greenback remained softer after Federal Reserve Chair Janet Yellen said Wednesday that monetary policy will need to remain accommodative for some time, citing slackness in the labor market and low inflation.

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