The Canadian Dollar rebounded against its US counterpart this morning following the release of Canadian inflation data. The USDCAD dropped as low as 1.0630 today, with the Canadian Dollar climbing 0.3 percent.
Canada?s May inflation rate holds steady at 2.2%. While growing housing and gasoline costs helped contribute to the inflation rate, declining natural gases costs helped to offset the upward pressures.
Eight of the ten major components in the S&P/TSX Composite were down today, leading to earlier declines. Included in these groups are the TSX?s energy group, down 0.7%, and TSX?s financial issuers group, down 0.4%. These losses followed a strong four-day performance by the TSX, advancing more than 450 points.
[I]Source: Financial Post[/I]
The Canadian Dollar felt a mild recovery against the US dollar today. In accordance with analysts? expectations, the 2.2% print from the nation?s annual price gauge CPI revealed that inflation rates are still above Canada?s target rate. Although inflation is slowing, there is still speculation that Canada will raise interest rates in July.
[/B]The Canadian Dollar rebounded against its US counterpart this morning following the release of Canadian inflation data. The USDCAD dropped as low as 1.0630 today, with the Canadian Dollar climbing 0.3 percent. Futures on interest rates are still pricing in possible rate hikes by the central bank given that the 2.2% CPI is above Canada?s 2% target rate. Hedge fund managers have increased their bets in a strengthening Canadian Dollar by close to 20,000 more wagers than last week. These events are paving a path for a strong up-coming CAD.
The S&P/TSX Index stumbled for the first time in four days after reaching a record high 14,176.42 yesterday. The TSX was dragged down by eight of its ten main components, including the mining sector, which fell 0.88 percent. The index recently quoted down 48.85 points and was trading at 14,127.57.
The lower-than-expected inflation data from the CPI directed the price of the 10-yr higher to C$95.37, pushing the yield down to 4.638%. Being that there is still solid speculation for possible of rate hikes from the central bank, advances from the 10-yr seem to have hit a ceiling. Next month, rate-setters meet and bond prices will await their decision.