USD/CAD – Canada hits highest inflation rate in seven years

Data from Stats Canada showed that inflation unexpectedly accelerated in the last month of 2018. Sharper costs for phone services and food were offset by lower gas prices, which pushed up the average inflation rate for all of 2018 to the highest level in seven-years.

Canada’s December CPI print rose +2% y/y vs. a +1.7% rise in November. The market was expecting a no change of +1.7% on the month.

For all of 2018, CPI rose +2.3%, following gains of +1.6% in 2017 and +1.4% in 2016.

The Bank of Canada (BoC) preferred measures for inflation was unchanged compared to November, with the average annual gain for the three core-inflation gauges holding firm at +1.9%. BoC sets rate policy to achieve and maintain +2% inflation.

USD/CAD has come under pressure since the release, -0.22% to C$1.3244

Canadian Securities

Other data releases showed that foreign investment in Canadian securities accelerated in November compared to the previous month, with the focus of their purchases in government bonds.

Non-resident investors bought a net +C$9.45B in Canadian securities in November vs. the previous month, when foreigners bought a net +C$3.97B.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell