Canadian Dollar Gains Post CPI Release

Canadian Dollar Gains Post CPI Release

By: Oliver Miller | Where To Trade | On:17-10-2014 00:39
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Key Highlights

  • US building permits data missed the forecast of a 2.8% gain and registered an increase of 1.5% in September 2014.
  • US Housing starts came better than the forecast of a 4.8% gain and registered an increase of 6.3% in September 2014.
  • Canadian consumer price index increased by 0.1% in September 2014, whereas the market was not expecting any change in the inflation.
  • Michigan consumer sentiment increased by 1.8 points from 84.6 to 86.4 for October, whereas the market was expecting a decline of 0.5 points.
  • Michigan consumer expectations increased by 3 points from 75.4 to 78.4 for October, whereas the market was expecting a decline of 1 point.
  • EURUSD pair was mostly seen trading in a range as the market prepares for a move for the next week.

 

Canadian Consumer Price Index

Earlier during the NY session, the Canadian consumer price index was released by the Statistics Canada. The market was expecting no change in the inflation this time around, but the outcome was better than expected. The Canadian consumer price index came at 0.1% in September 2014, compared to the last month. If we consider yearly change, then consumer Price Index (CPI) rose 2.0% in the 12 months to September, after increasing 2.1% in August 2014 according to the official release. This was in line with the expectation. The Canadian CPI increased for all the major components, including food, shelter and transportation. Shelter costs increased by 2.7% in terms of the yearly change, led by a 16.2% increase in natural gas prices. The highlight was the food prices, as it went up by 2.7% in September 2014, compared to the same month of the last year. Similarly, the transportation index rose 0.5%.

 

Where To Trade - Canadian CPI

 

The Canadian core consumer price index came at 0.2% in September 2014, compared to the last month’s increase of 0.5%. This was in line with the expectation. Moreover, the core CPI in the 12 months to September 2014 increased by 2.0%, which was down from the previous gain of 2.1%. So, the outcome was better than expected. This broadly affected the Canadian dollar, and it was seen trading lower after the release.

The USDCAD managed to shred yesterday’s gain and was seen trading lower today. There is an important support area around the 1.1205-00 levels which is protecting the downside in the pair. The 200 hourly simple moving average is also sitting around the mentioned area. So, the USDCAD sellers might struggle to pierce it, but if they managed to do so, then it would open the doors for further downside acceleration in the short term.

 

Michigan Consumer Sentiment

There was an important release lined up in the US i.e. the Michigan consumer sentiment was published. The market was expecting it to decrease by 0.5 points from 84.6 to 84.1. However, the outcome was a touch better, as the Michigan consumer sentiment jumped from 84.1 to 86.4. This particular release helped the US dollar to some extent as the pairs like EURUSD traded lower post release.

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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