Canadian Dollar Gains As CPI Increases By 2.1%

Canadian Dollar Gains As CPI Increases By 2.1%

By: Oliver Miller | Where To Trade | On:19-09-2014 09:23
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Key Highlights

  • Euro under pressure as the EURUSD pair dived below the 1.2880 support level. EURGBP selling also in play which is putting a lot of pressure on the Euro bulls.
  • Scots decided to stay in the UK. A major economic event passed and avoided a serious volatility in the market.
  • Canadian consumer price index increased by 2.1% in August 2014 compared to the same month of the last year.
  • German PPI fell by 0.8% in August compared to the same month of the last year.
  • EURCHF testing major support area where the Euro buyers are likely to take a stand.

Canadian Consumer Price Index

There was a major release in the Canada today, which was scheduled about an hour ago. The Canadian Consumer Price Index (CPI) was released by the Statistics Canada. The market was expecting the Canadian CPI to rise by 2.1% in the 12 months to August, matching the increase in July. The outcome was in line with the expectations or we can say that it somehow exceeded the forecast. The surprise side was the core CPI data. The report suggested that the core CPI rose by 2.1% in the 12 months to August whereas the market was expecting a 1.8% increase. So, this gave the Canadian dollar buyers a reason to take it higher.

When we consider the monthly change, then the Canadian CPI remained unchanged whereas some analysts were expecting a 0.1% decline in August 2014. The core CPI (MoM) also exceeded the expectation of an increase of 0.5%, up from the previous decline of 0.1%. Moreover, food prices were up by 2.2% and transportation costs increased by 1.2% in the 12 months to August.            

The Canadian dollar surged higher immediately after the release. The USDCAD pair was down by more than 50 pips. The pair spiked towards the 1.0980 level, and then fell lower to test the 1.0900 support area. There is a major support around the 1.0900-1.0880 area where the US dollar buyers might put up a fight against the Canadian dollar buyers. A daily close below the mentioned level might call for more losses in the pair, which could take it towards the 1.0800 swing level.

German Produce Price Index

There was only one major release in the Euro zone during the London session. The German Producer Price Index (PPI) which measures the change in the price of goods sold by mansufacturers was released by the Statistisches Bundesamt Deutschland. The outcome was as expected, but was on the disappointing side. The report mentioned that the German PPI decreased by 0.8% in August 2014, compared to the same month of the preceding year.

The EURUSD pair somehow did not like recent fundamentals, as a lot of sellers emerged during the London session. The EURUSD pair failed to break the 1.2920 level, and might be heading towards 1.2800 level. It would be interesting to see whether the pair can manage to hold the mentioned support level or not if reached.

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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