USD/CAD Heads Toward Parity, Supported by CPI Data
March 19, 2010 8:34 AM
The U.S. dollar traded around C$1.0111 after falling to C$1.0100 from C$1.0178 just after Statistics Canada reported higher than expected consumer price index figures. The U.S. dollar dropped to a 20-month low at C$1.0070 on Wednesday, not far from parity the CAD. The two currencies were last at par in July 2008.
Core inflation was 2.1% at an annualized rate in February, higher than the 2.0% recorded in January and the 1.7% expected by economists. All-items CPI rose by 1.6%, higher than the 1.4% expected by the market. It was at 1.9% in January. The Bank of Canada's target for inflation is 2.0%.
The stronger-than-expected inflation raises speculation that the Bank of Canada could begin raising interest rates ahead of most other major central banks. The CAD has rallied on this and other economic data with a positive bent.
