News Column

Canadian Dollar Extends Gain As CPI Hits New 2-year High

July 18, 2014

CANBERA (Alliance News) - The Canadian dollar resumed its early advance against its major counterparts in early New York deals on Friday, as the nation's consumer price inflation rose to a new 2-year high in June, due higher shelter, food and transportation prices.

Data from Statistics Canada showed that Canada's consumer prices rose 2.4% on year in June, following a 2.3% increase in May. Economists expected the inflation to come in unchanged from last month.

The inflation rose 0.1% month-over-month in June, in with expectations. The inflation rose to 0.5% in April.

The BOC said earlier this week in its monetary policy report and through Governor Stephen Poloz in a press conference that the recent advances in inflation rate are temporary, and that the index of consumer prices would stabilize at about 2.0% for both headline and core inflation over coming quarters.

Separate data showed that Canada's wholesale sales rose to a seasonally adjusted 2.2% in June, from a revised 1.4 in the previous month.

The loonie that had come off from early 2-day low of 1.0765 against the greenback advanced to a weekly high of 1.0707. If the loonie extends uptrend, 1.06 is seen its next possible resistance level.

The loonie firmed to 94.58 against the yen, after having fallen to more than a 4-week low of 93.90 at the beginning of Asian deals. Next key resistance for the loonie lies around the 95.00 region.

Members of the Bank of Japan's monetary policy board were satisfied with the pace of the country's economic recovery and they expect the recovery to continue, according to minutes from the bank's June 12-13 meeting.

Inflation expectations appear to be rising as the central bank draws nearer to its stated goal of 2% following years of deflation, it showed.

The loonie advanced to a 1-week high of 1.4483 against the euro, from an early 2-day low of 1.4561. If the loonie continues its advance, it may find resistance around the 1.44 zone.

The loonie rose back to 1.0052 against the aussie, reversing from more than 2-week low of 1.0102 hit shortly before the data. The loonie may find resistance at the 1.00 region.

The euro area current account surplus declined in May as the income and the surplus on visible trade decreased from April, the European Central Bank said.

The current account surplus fell to a seasonally adjusted EUR 19.5 billion from EUR 21.6 billion in April.

Looking ahead, Reuters/University of Michigan's preliminary consumer sentiment index for July and US leading indicators for June are due shortly.

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Source: Alliance News

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