The Canadian dollar churned yesterday, just before and immediately after the U.S. May inflation data was released. USD/CAD spiked to $1.2123 in a knee-jerk reaction to the Consumer Price Index surging 5.0% y/y, then plunged to $1.2068 after the details suggested the inflation gains were due to post-pandemic reopening pressures, which are not sustainable.
Bank of Canada Deputy Governor Timothy Lane’ speech did not have any impact on the currency. Lane reiterated comments from Wednesday’s monetary policy statement. He said the economy was growing as expected and wasn’t concerned about inflation, even though it was over 3.0% in April. Instead, the BoC is concerned about labour market pressures increasing slack in the economy.
The Canadian dollar continues to be underpinned by oil prices, a key reason why the loonie has outperformed against the Australian and New Zealand dollars. West Texas Intermediate, the North American benchmark, touched $70.77 in early New … Read more