USD/CAD is trading higher, and has broken above 1.3700, after the release of Canadian Consumer Price Index (CPI) data for June showed an easing of inflationary conditions in Canada. The data further raises the prospect of the Bank of Canada (BoC) cutting its key interest rate again at its July 24 policy meeting, after already cutting its policy rate by 0.25% to 4.75% in June.
Lower interest rates generally depreciate a currency as they reduce foreign capital inflows. The Canadian Dollar (CAD) is weakening against the US Dollar (USD) after the release – as USD itself pumps higher in most pairs following the release of US Retail Sales data at the same time as Canadian CPI was published.
The Canadian Dollar is weakening after the Canadian Consumer Price Index (CPI) in June showed a decline of 0.1% month-over-month compared to the previous month’s 0.6% gain and missing expectations of 0.1%, data from Statistics Canada shows on Tuesday.
On a yearly basis CPI rose 2.7% in June compared to 2.9% previously.
Core CPI rose by 0.1% compared to 0.3% previously.
The Bank of Canada’s Core CPI rose by 1.9% YoY in June from 1.8% previously, and on a monthly basis fell by 0.1% MoM compared to the 0.6% rise in May.
The US Dollar strengthens against the Canadian Dollar on Tuesday after Retail Sales data for June comes out – either in line with or – above economists’ expectations. The data suggests the US economy remains resilient which, in turn, supports the Greenback.
US Retail Sales rose by 0.0% in June as expected and below May’s upwardly revised 0.3%, according to data from the US Census Bureau on Tuesday.
The Retail Sales ex Autos rose 0.4% in June when a 0.1% increase had been estimated from a revised-up 0.1% previously.
The Retail Sales Control Group showed an increase of 0.9% from 0.4% in May. The Control Group is adjusted for seasonal variations and trading day differences and is seen as a more accurate measure of sales.