Canadian Dollar Touches 7 Month Low After Oil and Weak CPI

The Canadian dollar weakened to a seven-month low against its firmer U.S. counterpart on Friday as weaker-than-expected domestic data fueled interest rate cut bets and oil prices fell.

The value of Canadian retail sales unexpectedly declined 0.1 percent in August, data from Statistics Canada showed. Analysts had expected a gain of 0.3 percent.



Canada’s annual inflation rose in September to 1.3 percent from a rate of 1.1 percent in August, but fell short of the 1.5 percent advance analysts had forecast.

“The big surprise this week was the Bank of Canada contention that they actively talked about cutting rates. This (data) is just going to keep the flames alive on that talk,” said Doug Porter, chief economist at BMO Capital Markets.

The implied probability of a Bank of Canada interest rate cut by mid-2017 jumped to more than 40 percent from around 30 percent before the data, overnight index swaps data showed.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza