Canada’s dollar dropped versus most major peers as the nation’s consumer-price index fell below the central bank’s target, bolstering prospects policy makers will keep interest rates low.
The currency, called the loonie, touched the weakest in four months against the U.S. dollar before paring the loss as another report showed Canadian retail sales climbed more than three times what was forecast. Core inflation excluding more volatile categories came in at expectations. A technical indicator signaled the loonie may have fallen too much, too fast. It was still set for the biggest weekly loss against the greenback in a month.
“Core is basically in line with expectations and that’s enough to make them think the best direction for rates is to keep them on hold,” said David Tulk chief macros strategist at Toronto-Dominion Bank’s TD Securities unit by phone from Toronto. “Core is the operational guide for the bank and I think that’s close enough to their forecast that doesn’t provide them with enough of a reason to jump off at this point.”