Canadian Inflation Surges Higher But Fails to Trigger Bullish Sentiment for the Loonie

Daily Forex Fundamentals | Written by DailyFX | Sep 23 08 13:17 GMT |

Canadian CPI accelerated to a 3.5% pace in August (median same) following the 3.4% YoY clip in July, with a 26.3% gain in gasoline prices accounting for most of the increase. When energy is excluded, the CPI rose a much tamer 1.8% YoY during August after a 1.6% clip in July. Yet the CPI did fall 0.2% compared with July (median same) after the 0.3% MoM gain in July to mark the first decline since January's identical 0.2% drop. The BoC's core index jumped to 1.7% YoY, stronger than expected (median 1.6%) versus the 1.5% clip in July, with the index rising 0.3% MoM in August following back to back 0.1% gains in June and July. The acceleration in the core index highlights the ongoing upside risk to underlying inflation posed by the previous run-up in energy prices. However, rising inflation has failed to boost interest rate expectations as market participants expect the BoC to lower rates at least once over the next 12 months. As a result, the Canadian dollar failed to move on the release, with the USDCAD holding around 1.0330. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.