USD/CAD – CAD trades weaker on BoC preferred inflation measure miss

The annual inflation rate in Canada accelerated slightly in April on broad-based price increases for items such as mortgage payments, vehicles and fresh vegetables.

According to Stats Canada, Canada’s CPI rose +2.0% y/y, after a +1.9% advance in March.

On a month-over-month basis, inflation climbed +0.4%, led by higher prices for gasoline and women’s clothing.

However, the Bank of Canada (BoC) preferred measures for underlying inflation moved down. The average annual gain for the three core-inflation measures came in at +1.9% m/m vs. March’s +2%.

CAD is trading at the low of the day so far, the USD is up +0.2% at C$1.3490.

U.S retail sales miss

South of the Canadian border, an important measure of consumer spending fell in April, signalling spending was sluggish stateside as Q2 begins.

Retail sales declined a seasonally adjusted -0.2% in April m/m according to the Commerce Department.

The drop fell short of the +0.2% increase the market was expecting. The disappointing print has dealers increasing the odds for a Fed rate cut sooner than later.

Dollar Stuck in Contained Vortex

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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