Canadian Dollar Sell-Off Pauses After CPI and Retail Sales Data
The Canadian dollar fell to a four-month low on Friday, ahead of the nation's CPI and Retail Sales reports.
Earlier in the week the Canadian currency had been under pressure against its U.S. counterpart, as positive economic data and speculation over tighter monetary policy underpinned the greenback. Additionally, recent comments from both Bank of Canada Governor Stephen Poloz and Reserve Bank of Australia Governor Glenn Stevens weighed on the Canadian dollar.
Consumer price inflation in Canada fell 0.2 oercent in October, missing expectations for a 0.2 percent increase.
Meanwhile, core consumer price inflation, which excludes food and energy, rose 0.2 percent last month, higher than the expected zero percent reading.
Canada's annual inflation rate fell to a five-month low of 0.7 percent from 1.1 percent in September. With inflation below the central bank target of between one percent and three percent, the Bank of Canada is under little pressure to raise interest rates.
Statistics Canada reported retail sales beat expectations, rising by 1.0 percent in September on strong new car sales.
RBA Governor Stevens Comments
The Canadian dollar softened along with fellow "commodity currencies", the Australian dollar and New Zealand dollar, after Reserve Bank of Australia Governor Stevens said he was "open minded" on the possibility of intervention.
"Our position has long been, and remains that foreign exchange intervention can, judiciously used in the right circumstances, be effective and useful," Stevens said Thursday at the Australian Business Economists annual dinner in Sydney.
BOC Poloz Comments
On Wednesday, Bank of Canada Governor Poloz stated the current level of monetary stimulus is still appropriate.
“The Bank judged on October 23 that the substantial monetary policy stimulus in place remained appropriate and decided to maintain the target for the overnight rate at one percent," he told the Senate banking committee in Ottawa.
The Bank of Canada has maintained its benchmark interest rate at one percent since 2010, as part of an effort to stimulate the economy.
USD/CAD Daily Chart
Looking at the daily USD/CAD chart we can see that price reached up to major resistance at 1.0566 before retreating. Potential support lies below at 1.0443.
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