Canadian dollar tumbles on stronger US inflation data
June 18, 2014 8:15 amVideo
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The Canadian dollar slid versus the US dollar Tuesday, as stronger than anticipated IS inflation data raised speculation the US Federal Reserve might increase interest rates sooner than expected.
US consumer prices logged their biggest profit in more than a year in May, leading to a firming of inflation pressures as the Fed starts its two-day policy meeting.
“We’re not seeing high trading volumes and just a slightly higher upward ebb in USD/CAD, which is the result of the inflation data out of the U.S. this morning,” said Scott Smith, Senior Market Analyst at Cambridge Mercantile Group.
The loonie concluded the North American session at C$1.0864 to the greenback or 92.05 US cents, down from Monday’s C$1.0841 to the greenback or 92.24 US cents.
Canadian inflation and retail sales data to be released Friday could grind the picture on the Canadian interest rate view. With upward inflation pressure so far not seen in the country, investors currently do not anticipate a rate hike until 2015.
“There’s the potential if we get an upside surprise with inflation on Friday and some more optimistic data points out of Canada over the next several weeks, we could see a break of the C$1.08 (92.59 US cent) level, but I think that’s going to hold up pretty well,” Smith added.
Canadian government bond prices inched lower across the maturity curve, with the 2-year fell 2.7 Canadian cents, to 1.114% and the 10-year dipped 20 Canadian cents, to 2.31%.
The material has been provided by InstaForex Company – www.instaforex.com
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