USD/CAD solid despite soft inflation
If the market was looking for a reason to sell the Canadian dollar, it came in the form of a weak CPI report with core inflation up just 2.1% compared to 2.4% expected.
Immediately after the report, USD/CAD jumped to 1.1635 from 1.1600 but has virtually retraced the gain. It’s a recurring them in the final quarter; since Sept 30 oil is down 40% and the Canadian dollar is down just 4%.
That could change in the year ahead. USD/CAD hit a five-year high of 1.1672 on Tuesday and the long-term technical picture will be crippled if the mid-2009 high of 1.1725 breaks and oil prices remain in the gutter.
USDCAD weekly chart
The Canadian dollar is benefiting somewhat from ties to the United States and optimism about US growth but the flip-side is that if the US stumbles in 2015; it will be a painful year for the loonie.
